IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
COLUMBIA
Civil Action No. 1:03CV00261
George Parker
3305 Duck Court
Upper Marlboro, MD 20772
Gloria Guess
4019 36th Street
Mt. Rainier, MD 20712
Alfred E. Hubbard
7706 13th Street, N.W.
Washington, D.C. 20012
William F. Rope
3815 Woodley Road, N.W.
Washington, DC
Plaintiffs, (on their own behalf and on behalf of those similarly
situated)
v.
American Federation of Teachers AFT
Sandra Feldman, President
555 New Jersey Avenue, N.W.
Washington, DC 20001
Ester Hankerson, Individually and as Executive Board Member
Washington Teachers Union – Local #6
1717 K Street, NW
Washington, DC 20036
Barbara Bullock
1221 Massachusetts Avenue, N.W.
Apartment 1021
Washington, DC 20001
Gwendolyn M. Hemphill
1919 Yorktown Road, N.W.
Washington, DC 20001
James O. Baxter, II
1307 Lark Lane
Fort Washington, MD 20744
Leroy Holmes
11101 Bennington Drive
Upper Marlboro, MD 20774
Errol Alderman, individually and D/b/a/ Expressions Unlimited
2300 Pattern Bond Drive
Silver Spring, MD 20902
Michael Martin, Individually and D/b/a Expressions Unlimited
1200 Quartette Lane
Bowie, MD 20720
Cheryl Martin
1200 Quartette Lane
Bowie, MD 20720
Gwendolyn B. Clark
307 Yoakum Parkway, #711
Alexandria, VA 22304
Independence Federal Savings Bank
1229 Connecticut Avenue, N.W.
Washington, D.C. 20036
Rameé Art Gallery
5427 14th Street, N.W.
Washington, DC 20011
Curtis Lewis, Esquire
733 15th Street, N.W.
Washington, DC 20005
Curtis Lewis & Associates
733 15th Street, N.W.
Washington, DC 20005
James Goosby
Goosby Income Tax Service
3311 Hubbard Road
Landover, MD 20785
AMENDED COMPLAINT FOR DAMAGES
Introduction
For their Class Action Petition for Damages against the Defendants described
in the caption above, Plaintiffs, on his/her/their own behalf and on behalf of
all others similarly situated in the District of Columbia, allege and state as
follows:
1. Member teachers of the Washington Teachers’ Union, Local #6, AFL-CIO
("WTU") who are also members of the parent organization, American
Federation of Teachers, AFL-CIO, have been the victims of an illegal scheme
perpetrated by Barbara A. Bullock, Gwendolyn M. Hemphill, James O. Baxter II,
Leroy Holmes, Errol Alderman, Expressions Unlimited, Michael Martin, Cheryl
Martin and Gwendolyn B. Clark (collectively "Defendants"), to
misappropriate, misuse and convert the Washington Teachers’ Union’s funds
to Defendants’ personal use and to the unauthorized use of others, thereby
denying Plaintiffs and each member of the Class proposed to be represented by
them, the lawful owners of those funds, sums in excess of Five Million Dollars
($5,000,000.00).
2. Defendant AFT, the parent organization has oversight responsibility for
the audit and review of the financial operations of the local. Under this
oversight responsibility, AFT is required to perform an audit and/or review of
WTU ‘s finances. During at least the period of 1998 up to and including 2002,
AFT negligently failed to perform audits or review the finances of WFT as
required. This consistent and ongoing failure to perform its fiduciary
responsibilities owed to the individual member teachers, Plaintiffs and each
member of the Class proposed to be represented by them, has caused financial
losses through the gross mismanagement of Defendant AFT.
3. Defendants, individual members of the Board of WTU and named individually
herein, participated in this scheme using WTU as an enterprise to conduct their
unlawful activity resulting in serious injury to Plaintiffs and each member of
the Class proposed to be represented by them.
4. Beginning on or before 1995, less than one year after she took office,
Bullock began using WTU’s funds, through the use of Union credit cards, to
purchase designer clothes, furs, accessories and gifts; by issuance of WTU
checks to herself and to others for her personal benefit; and by issuance of
WTU checks to the other Defendants, including Baxter and her sister Clark.
5. Baxter and Bullock both signed the checks that went to Bullock and to
merchants, such as a custom clothier, who provided goods solely for Bullock’s
person use, received statements indicating Bullock’s personal charges on WTU’s
credit cards and paid the bills for those credit cards with WTU funds.
6. Clark and Bullock shared personal bank accounts and a Diners Club card.
Proceeds from checks written to Bullock were deposited into those joint
accounts and charges made by both Bullock and Clark on their Diners Club card
were paid by the Union. Additionally, Bullock engaged Clark’s company, Gwen’s
of Columbia, to "decorate" WTU’s office for the winter holidays.
For those services, Gwen Clark and Gwen’s of Columbia were paid over Fourteen
Thousand Six Hundred Dollars ($14,600.00).
7. As with Bullock, beginning on or before 1995, less than one year after he
took office, Baxter began using WTU’s funds for his personal benefit, through
the use of Union credit cards to purchase personal items, such as food,
clothing and entertainment; by issuance of WTU checks to himself, to the other
Defendants and to others.
8. Gwendolyn M. Hemphill was hired in 1996 as Special Assistant to the
President and served as Bullock’s high-level aide. Shortly after being hired,
Hemphill took over the day-to-day responsibility for WTU’s financial affairs.
In this capacity, Hemphill wrote the checks to be issued by the Union and
presented them to Bullock and Baxter for signature. She also maintained WTU’s
accounts. Around 1996, WTU obtained a stamp, to be used to affix Bullock’s
signature to checks. Hemphill had access to, control of and maintained
possession of the Bullock signature stamp. Using it, in many cases at the
direction of Bullock, Hemphill affixed one of the two signatures needed to
authorize checks written on WTU’s accounts.
9. Beginning on or before December 1996, shortly after she was hired,
Hemphill began using WTU’s funds to write checks to herself and to others,
including her son-in-law, Michael Martin, as well as the other Defendants.
Beginning on or before 1998, Hemphill began issuing large checks to Holmes, a
driver for Bullock. Upon cashing the checks, Holmes gave the proceeds to
Hemphill, who returned a portion of the cash to Holmes and retained the rest.
In addition, some of the proceeds from checks issued to Holmes were deposited
into the personal bank account of Bullock. Since 1998, Hemphill issued checks
to Holmes in excess of over One Million Two Hundred Thousand Dollars
($1,200,000.00). Hemphill also issued a large number of checks to her
son-in-law, Michael Martin, his business associate Alderman, and a company with
which both Martin and Alderman were affiliated, Expressions Unlimited. Between
the period beginning about July 1, 1998 through approximately September 2002,
unauthorized WTU checks in excess of Four Hundred and Fifty Thousand Dollars
($450,000.00) were issued to Expressions Unlimited. Upon information and
belief, some of these checks were deposited in Hemphill’s personal bank
account.
10. In addition, beginning on or before May 1998, Hemphill was issued a
Union credit card, to which she began making unauthorized purchases of personal
items, such as clothing, electronics and jewelry, including a plasma television
costing over Ten Thousand Dollars ($10,000.00), which was delivered to her
home. Hemphill also used WTU’s credit cards to purchase items for her
daughter and son-in-law, Cheryl and Michael Martin, including the purchase of a
dining room table purchased on November 4, 1999 and delivered to the Martin’s
home and a trip to the Bahamas purchased for the Martin’s on February of
2000.
11. In addition to Holmes’ activities described above, Holmes was paid in
cash from WTU funds to be Bullock’s personal chauffeur. In addition to
driving Bullock to official Union meetings and appointment, Holmes drove
Bullock to run personal errands, such as antiquing and clothes shopping at
various shopping malls across the Washington, DC metropolitan area.
12. Together, through their collective efforts, Bullock, Baxter and Hemphill
issued checks to themselves and the other Defendants and made purchases on WTU’s
credit cards for themselves and the benefit of the other Defendants, in a
scheme to illegally embezzle and convert WTU’s funds. Alderman, Michael
Martin, individually and through their business, Expressions Unlimited, Cheryl
Martin, and Clark, individually and through her business, Gwen’s of Columbia,
cashed, deposited or otherwise made use of WTU’s funds and property for their
personal benefit. This scheme began in 1995 and continued until their
activities were uncovered on or around September 2002.
13. Defendant AFT’s failure to exercise its responsibility of financial
oversight created under AFT’s constitution resulted in massive fiscal damages
to be suffered by the individually named Plaintiffs and each individual
similarly situated.
JURISDICTION AND VENUE
14. This action arises under provisions of the Racketeer Influenced and
Corrupt Organizations Act ("RICO") 18 U.S.C. § 1961 et seq., the
Labor-Management Reporting and Disclosure Act ("Landrum-Griffin Act")
29 U.S.C. § 501 et seq., and various state law claims. This Court has
jurisdiction over the case pursuant to 28 U.S.C. §1331 because this complaint
arises under the laws of the United States, and 28 U.S.C. §1367 because
supplemental claims arising under the laws of the District of Columbia are so
related to the Federal claims in this action that they form part of the same
case or controversy.
15. Venue is proper in the United States District Court for the District of
Columbia pursuant to 28 U.S.C. §1391 (b)(2) because a substantial part of the
events and omissions giving rise to the claims occurred in the District, the
Washington Teachers’ Union is located in the District, and Barbara A. Bullock
and Gwendolyn H. Hemphill reside here. 18 U.S.C. § 1965(a)-(b).
16. All of the Defendants are subject to the exercise of personal
jurisdiction by this Court.
17. There exists now between the parties an actual, justifiable controversy
in which Plaintiffs is entitled to relief because of the facts and
circumstances set forth below.
PARTIES
CLASS ACTION ALLEGATIONS
18. Defendant, the American Federation of Teachers, AFL-CIO (AFT), is a,
non-profit labor union and parent organization of the local Washington Teachers
Union (WTU) having its principal place of business at 555 New Jersey Avenue,
N.W., Washington, DC 20001. AFT is an international labor organization
representing local unions primarily made-up of public and private school
teachers, paraprofessionals and higher education faculty. Members of the local
unions chartered by the AFT are also members of the AFT. AFT owes a fiduciary
duty to its members.
19. The four individually named and similarly situated Plaintiffs are all
teachers in the District of Columbia Public School System and all members of
the American Federation of Teachers and the Washington Teachers Union.
20. There are over 5,000 similarly situated teachers who are members of the
Washington Teachers Union and the American Federation of Teachers. As such, it
is impracticable to join all interested parties, i.e. teacher members
individually to this lawsuit.
21. The American Federation of Teachers has acted uniformly with respect to
each individual teacher that is a potential class member.
22. The actions of each of the individually named defendants have affected
each individual potential member of the class in a uniform way.
23. Each individually named Plaintiffs and each member teacher of the
American Federation of Teachers and the Washington Teachers Union is entitled
to recover monies illegally misappropriated by the individually named
defendants – monies rightfully belonging to every member of the Washington
Teachers Union of which the individually named Plaintiffs are members.
24. Every allegation of a breach of the fiduciary duty of the American
Federation of Teachers and misappropriation of funds by the individually named
defendants is common to each and every member of the Washington Teachers Union
and the individually named Plaintiffs who are representative thereof.
25. Defendant Barbara A. Bullock ("Bullock") is an individual who
resides at 1221 Massachusetts Avenue, N.W., #1021. Washington, DC 20005.
Bullock served as the elected President of the Washington Teachers’ Union
from on or about July 1, 1994 through on or about September 2002.
26. During the time she served as an officer, agent and representative of
the Union, Bullock had check signing authority and overall responsibility for
the conduct of WTU’s affairs.
27. During her tenure as President, Bullock made unauthorized personal
charges on WTU’s credit card accounts; issued or caused to be issued
unauthorized checks to herself and to others from WTU’s bank accounts;
knowingly received unauthorized funds and material goods paid for by WTU’s
bank accounts; knowingly received unauthorized funds and material goods paid
for by WTU funds; knowingly conducted financial transactions with money
received as the result of unlawful activity; and engaged in money laundering.
28. Together with Defendants Gwendolyn M. Hemphill ("Hemphill"),
James O. Baxter II ("Baxter"), Leroy Holmes ("Holmes"),
Errol Alderman ("Alderman"), Michael Martin, Cheryl Martin and
Gwendolyn B. Clark "(Clark"), Bullock orchestrated and participated
in an illegal scheme to convert Union funds to her personal use and to the use
of others.
29. Defendant Gwendolyn M. Hemphill is an individual who resides at 1919
Yorktown Road, N.W., Washington, DC 20012. Hemphill is a former WTU employee
who served as Special Assistant to the President and Legislative Representative
from 1996 through on or about September 2002.
30. In her position as an agent, employee and representative of the Union,
Hemphill had general responsibility for the financial affairs of the Union,
check writing responsibility and maintained possession and control of a
signature stamp bearing Bullock’s name.
31. During her tenure as Special Assistant to the President, Hemphill made
unauthorized personal charges on WTU’s credit card accounts; issued or caused
to be issued unauthorized checks to herself and to others from WTU’s bank
accounts; knowingly received unauthorized funds and material goods paid for by
WTU funds; knowingly conducted financial transactions with money received as
the result of unlawful activity; and engaged in money laundering.
32. Together with Defendants Bullock, Baxter, Holmes, Alderman, Michael
Martin, Cheryl Martin and Clark, Hemphill orchestrated and participated in an
illegal scheme to convert Union funds to her personal use and to the use of
others.
33. Defendant James O. Baxter, II is an individual who resides at 1307 Lark
Lane, Fort Washington, MD 20744. Baxter is the elected Treasurer of the
Washington Teachers’ Union.
34. Baxter served in the capacity as Treasurer from on or about July 1, 1994
through approximately September 2002, when he was asked to take a leave of
absence without pay from the Union.
35. In his position as an agent, employee and representative of the Union,
Baxter had check signing authority and financial responsibility for WTU’s
affairs.
36. During his tenure as Treasurer, Baxter made unauthorized personal
charges on WTU’s credit card accounts; issued or caused to be issued
unauthorized checks to himself and to others from WTU’s bank accounts;
knowingly received unauthorized funds and material goods paid for by WTU funds;
knowingly conducted financial transactions with money received as the result of
unlawful activity; and engaged in money laundering.
37. Together with Defendants Bullock, Hemphill, Holmes, Alderman, Michael
Martin, Cheryl Martin and Clark, Baxter orchestrated and participated in an
illegal scheme to convert Union funds to his personal use and to the use of
others.
38. Defendant Leroy Holmes is an individual who resides at 11101 Bennington
Drive, Upper Marlboro, MD 20774. Holmes served as Bullock’s personal driver
beginning around 1998 through approximately September 2002 and was paid for his
services by WTU.
39. Holmes knowingly received unauthorized funds from WTU; cashed checks for
large sums of money written on WTU’s accounts; knowingly conducted
unauthorized financial transactions with money received as the result of
unlawful activity; and engaged in money laundering.
40. Together with Defendants Bullock, Baxter, Hemphill, Alderman, Michael
Martin, Cheryl Martin and Clark, Holmes participated in an illegal scheme to
convert Union funds to his personal use and the personal use of others.
41. Errol Alderman is an individual who resides at 2300 Pattern Bond Drive,
Silver Spring, MD 20902.
42. Upon information and belief, Alderman was affiliated with a business
called Expressions Unlimited.
43. Alderman, individually and doing business as Expressions Unlimited;
knowingly received unauthorized funds from WTU, personally, individual and as
an agent of Expressions Unlimited, knowingly conducted financial transactions
with money received as the result of unlawful activity; and engaged in money
laundering.
44. Together with Defendants Bullock, Baxter, Hemphill, Holmes, Michael
Martin, Cheryl Martin and Clark, Alderman participated in an illegal scheme to
convert Union funds to his personal use and to the use of others.
45. Defendant Michael Martin is an individual who resides at 1200 Quartette
Lane, Bowie MD 20720.
46. Michael Martin is the son-in-law of Hemphill, the husband of Cheryl
Martin and upon information and belief, was affiliated with a business called
Expressions Unlimited.
47. Michael Martin, individually and doing business as Expressions Unlimited
knowingly received unauthorized funds and material goods paid for by WTU funds,
personally and individually, and as agent of Expressions Unlimited; knowingly
conducted financial transactions with money received as the result of unlawful
activity; and engaged in money laundering.
48. Together with Defendants Bullock, Baxter, Hemphill, Holmes, Alderman,
Cheryl Martin and Clark, Michael Martin participated in an illegal scheme to
convert Union funds to his personal use and to the use of others.
49. Defendant Cheryl Martin is an individual who resides at 1200 Quartette
Lane, Bowie, MD 20720. Cheryl Martin is the daughter of Hemphill and the wife
of Michael Martin.
50. Cheryl Martin knowingly received unauthorized funds and material goods
paid for by WTU funds; unknowingly conducted financial transactions with money
received as the result of unlawful activity; and engaged in money laundering.
51. Together with Defendants Bullock, Baxter, Hemphill, Holmes, Michael
martin, Alderman, and Clark, Cheryl Martin participated in an illegal scheme to
convert Union funds to her personal use and to the use of others.
52. Defendant Gwendolyn B. Clark is an individual who resides at 307 Yoakum
Parkway, #711, Alexandria, VA 22304. Clark is the sister of Bullock.
53. Clark knowingly received unauthorized funds and material goods paid for
by WTU funds; knowingly conducted financial transactions with money received as
the result of unlawful activity; and engaged in money laundering. Together with
Defendants Bullock, Baxter, Hemphill, Holmes, Michael Martin, Cheryl Martin and
Alderman, Clark participated in an illegal scheme to convert Union funds to her
personal use and to the use of others.
54. Independence Federal Savings Bank ("IFSB") is a federally
chartered stock saving bank located in Washington, D.C.
55. George Parker is a resident in the state of Maryland. Mr. Parker is a
teacher from the DC public school system and a member of the Washington
Teachers Union.
56. Gloria Guess is a resident in the state of Maryland. Ms. Guess is a
teacher for the DC public school system and a member of the Washington Teachers
Union.
57. Alfred Hubbard is a resident in the District of Columbia. Mr. Hubbard is
a teacher for the DC public school system and a member of the Washington
Teachers Union.
58. William Rope is a resident in the District of Columbia. Mr. Rope is a
teacher for the DC public school system and a member of the Washington Teachers
Union.
(WTU-Generally)
59. Paragraphs 1-59 are herein incorporated by reference.
60. WTU is a labor organization representing approximately 5,000 persons
employed by or retired from the Board of Education of the District of Columbia.
The membership primarily consists of District of Columbia public school
teachers and professionals.
61. WTU is affiliated with AFT.
62. In addition to being affiliated with AFT, WTU is affiliated with the
Greater Washington Central Labor Council, the Maryland State and District of
Columbia AFTL-CIO, and the United Federation of Maryland and D.C. Teachers, and
is the primary bargaining agent for District of Columbia public school
teachers. Individuals who are members of WTU are also members of AFT.
63. WTU is governed by a Constitution and By-Laws, which set forth WTU’s
purpose, operating procedures, election and discipline procedures, meeting
requirements and the duties of its officers and board of directors.
64. WTU’s Constitution and By-Laws call for the biennial election of
officers and for such officers to hold two-year terms.
65. The Union officers, employees and vendors named as Defendants herein,
engaged in a conspiracy to and did commit serious felony offenses to the
detriment of Plaintiffss and each member of the Class proposed to be
represented by them, including: money laundering, in violation of 18 U.S.C.§
1956; engaging in monetary transactions with property derived from unlawful
activity, in violation of 18 U.S.C. § 1957; and embezzlement from the Union,
in violation of 29 U.S.C. §501(c).
66. As the result of an affidavit filed by the Federal Bureau of
Investigation, search warrants were executed, inter alia, at Defendants’
homes on December 19, 2002, on the ground that there is probable cause to
believe that Defendants committed and participated in these crimes.
67. Bullock, Baxter, Hemphill, Holmes, Alderman, Michael Martin, Cheryl
Martin and Clark, in their positions as Union officers, agents, representatives
and employees, or through their relationships with Union officers, agents,
representatives and employees, aided and abetted and participated in, and used
the Union as part of their conspiracy to embezzle and convert funds of the
Union, in that they authorized, issued, or caused to be issued, cashed,
deposited or otherwise made use of unauthorized checks written on WTU’s bank
accounts; received material goods paid for by WTU funds and money illegally
obtained from WTU; submitted false invoices for payment to WTU; and received
payment for goods and services not authorized by WTU.
68. Bullock, Baxter, Hemphill, Holmes, Michael Martin, Cheryl Martin,
Alderman and Clark conducted numerous financial transactions involving checks
received from Bullock, Baxter and Hemphill, written on WTU’s bank accounts,
knowing that the checks were used to illegally covert funds from WTU; cashed
and deposited those checks in their personal bank accounts, bank accounts of
their affiliated businesses, including Expressions Unlimited, and at times,
deposited the funds into the bank accounts of Bullock and Hemphill.
69. Additionally, Bullock, Baxter and Hemphill used Union American Express
credit cards issued to them in their positions as Union officers, agents,
representatives and employees, and to be used solely for the conduct of Union
business, to make personal or otherwise unauthorized purchases for the benefit
of themselves, the other Defendants and others. Bullock, Baxter and Hemphill
further inappropriately and without authorization caused the Union to use Union
funds to pay the credit card bills associated with those accounts, which
included the personal and unauthorized purchases charged thereon. Bullock,
Baxter and Hemphill did not receive authorization from WTU’s Board of
Directors or the Union membership to make those purchases or payments, nor did
they reimburse WTU for those charges or payments.
(Bullock)
70. Paragraphs 1-69 are herein incorporated by reference.
71. Bullock was elected by WTU’s membership to the position of President
for a two-year term commencing on or about July 1, 1994. She was subsequently
reelected to that position biannually and continued in that role until on or
about September 2002, when she voluntarily agreed to relinquish her duties and
accept leave without pay from the Union.
72. Bullock formally resigned as President on October 23, 2002.
73. In accordance with the Constitution and By-Laws of the Union, as
President, Bullock was charged with administering all of the affairs of and the
executive policy of the Union, acting as Chairman of the Executive Board, and
signing all necessary documents, including the co-signing of checks.
74. Bullock had overall responsibility and authority for the conduct of WTU’s
affairs.
75. Beginning in 1995, on behalf of WTU, Bullock and Baxter entered into
Corporate Account Agreements with American Express Travel Related Services
Company ("American Express") for the issuance of corporate credit
cards to the Washington Teachers Union. As stated in the Corporate Account
Agreements, American Express issued credit cards to persons whom the Union
designated in writing to receive a corporate card ("Corporate Cardmembers").
Baxter and Bullock caused cards from the Corporate Account to be issued to
themselves, Ester Hankerson, WTU’s General Vice President, and Hemphill.
Prior to receiving a corporate card, each Corporate Cardmember agreed to the
Corporate Cardmember Agreement, which among other things, stated that the
American Express Corporate cards were to be used solely for WTU business
purposes.
76. The Washington Teachers Union paid the bills for the American Express
accounts with Union funds.
77. From the period beginning in 1995 through July 2002, Bullock was issued
a total of five Corporate Cards from WTU’s two Corporate Accounts, including
card numbers 3782-964988-01016 (1995-1996); 3782-964988-01008 (9/97-7/02);
3782-964988-02014 (11/96-7/02); 3782-993128-11005 (10/00-7/02) and
3782-993128-11013 (9/99-7/02).
78. During her tenure as President, Bullock made substantial unauthorized
purchases on WTU’s corporate credit cards. A large portion of those charges
were for goods and services of a clearly personal nature, including, but not
limited to: custom, designer, and hand-made clothing; dry-cleaning; beauty
salon services; jewelry; art; furniture; and furs. Many such purchases were
delivered to Bullock’s home or the home of her sister, Clark.
79. Bullock did not receive authorization from WTU’s Board of Directors or
the Union membership to make those purchases, nor did she reimburse WTU for
those charges. WTU’s Board of Directors and the Union membership were not
aware of this unauthorized use of Union funds by Bullock.
80. In addition to purchasing items for her personal use, Bullock purchased
items on WTU’s Corporate American Express Cards for others.
81. Bullock’s unauthorized and personal charges to WTU’s Corporate
American Express Cards, which have been identified to date, exceed One Million
Eight-Hundred Thousand Dollars ($1,800,000.00).
82. Bullock also issued or caused to be issued checks from WTU’s bank
accounts to herself and to merchants for the purchase of goods and services
solely for her personal benefit, including checks for custom-made clothing and
checks to Diner’s Club to pay for meals, hotels, designer clothing and
jewelry. These checks were not authorized by WTU’s Board of Directors and
were used to illegally convert funds from WTU. WTU’s Board of Directors and
the Union membership were not aware of this unauthorized use of Union funds by
Bullock.
83. In total, checks issued or caused to be issued by Bullock to herself and
to others for her personal benefit, exceed Three-Hundred and Eighty-One
Thousand Dollars ($381,000.00).
84. Additionally, Bullock issued or caused to be issued unauthorized checks
in excess of One Million Five-Hundred Thirteen Thousand ($1,513,000.00) from
WTU's bank accounts to Baxter, Hemphill, Holmes, Michael Martin, Cheryl Martin,
Alderman, Expressions Unlimited and Clark, in a scheme to convert WTU's funds.
Those checks were not authorized by WTU's Board of Directors and were used to
illegally convert funds from WTU. Because AFT negligently failed to conduct the
bi-annual audits, Plaintiffs and each member of the Class proposed to be
represented by them were not aware of this unauthorized use of Union funds by
Bullock.
85. Hemphill served as Special Assistant to the President and Legislative
Representative of WTU from 1996 through on or about September 2002, when she
voluntarily agreed to relinquish her duties and accept leave without pay from
the Union.
86. Hemphill formally resigned from her positions on November 1, 2002.
87. As Special Assistant to the President, Hemphill served as the office
manager and high-level aid to Bullock. In this capacity, Hemphill was
responsible for overseeing the administration of WTU's offices and managing its
staff.
88. As a result of the illness and subsequent death of WTU's internal
accountant, beginning in 1996, Hemphill took over responsibility for many of
WTU's financial matters, including check writing, payroll, benefits
administration and accounts receivable.
89. In addition to her check writing responsibilities, Hemphill maintained
possession of a signature stamp bearing Bullock's signature, which she used to
affix Bullock's name via the stamp to checks written on behalf of the Union.
90. From the period beginning on or about May 1998 through July 2002,
Hemphill was issued Corporate Cards from WTU's two Corporate Accounts,
including card numbers 3782-964988-01040 (5/98-11/99) and 3782-964988-11021
(9/99-7/02).
91. During her tenure as Special Assistant and Legislative Representative,
Hemphill used these credit cards, which were issued solely for the purpose of
conducting the official business of the Washington Teachers' Union, to make
numerous unauthorized personal charges on WTU's credit card accounts, including
a large number of purchases of a clearly personal nature, including, but not
limited to: art; antiques; electronic equipment; jewelry; evening gowns;
designer handbags and clothing; hair care; and personal travel.
92. Hemphill did not receive authorization from WTU's Board of Directors or
the Union membership to make those purchases, nor did she reimburse WTU for
those charges. Because AFT negligently failed to exercise its fiscal oversight
responsibility, Plaintiffs and each member of the Class proposed to be
represented by them were not aware of this unauthorized use of Union funds by
Hemphill.
93. In addition to purchasing items for her personal use, upon information
and belief, Hemphill purchased items on WTU's Corporate American Express Cards
for use by other members of her family, including her husband Laurence
Hemphill, and other Defendants including Michael Martin, Cheryl Martin and
Clark.
94. In total, Hemphill's unauthorized and personal charges to WTU’s
Corporate American Express accounts exceed Three-Hundred and Eleven Thousand
Dollars ($311,000.00). Hemphill did not receive authorization from WTU's Board
of Directors or the Union membership to make the unauthorized purchases, nor
did she reimburse WTU for those charges. Because AFT negligently failed to
exercise its fiscal oversight responsibility, Plaintiffs and each member of the
Class proposed to be represented by them were not aware of this unauthorized
use of Union funds by Hemphill.
95. Hemphill also wrote or caused to be written checks to herself in the
amount of One Hundred and Eighty-One Thousand Dollars ($181,000.00). Those
checks were not authorized by WTU's Board of Directors and were used to
illegally convert funds from WTU. Additionally, Hemphill wrote or caused to be
written checks to other participants in the illegal scheme, including Holmes,
Michael Martin, Cheryl Martin, Alderman, Expressions Unlimited and Clark.
Included among those checks were some checks written to Expressions Unlimited
the proceeds of which were deposited in Hemphill's personal bank account. Those
checks were not authorized by WTU's Board of Directors and were used to
illegally convert funds from WTU's treasury.
96. Upon information and belief, Hemphill directed Holmes to cash checks for
large sums of money on WTU's account and to return the proceeds to her or to
deposit them in Bullock's personal bank account. Upon information and belief,
upon receiving cash proceeds from Holmes, Hemphill returned a portion of the
money to Holmes and retained the rest.
97. Checks issued on the Washington Teachers' Union's accounts were prepared
by Hemphill, signed by Baxter and issued with the knowledge of, and in many
cases, at the direction of Bullock.
(Baxter)
98. Paragraphs 1-97 are herein incorporated by reference.
99. Baxter was elected to the position of Treasurer by the WTU membership
and t assumed office on or about July 1, 1994. He was subsequently reelected as
Treasurer in biennial elections and continued in that role until present.
100. As Treasurer, Baxter was responsible for receiving and disbursing
funds, co- signing all checks, issuing all receipts, notifying members of
non-payment of dues, presenting financial reports to the membership and
maintaining satisfactory financial records.
101. In September 2002, the WTU Board removed Baxter from his duties and put
him on leave without pay. WTU formally requested Baxter's resignation on
October 23, 2002, however, he has refused to resign.
102. From the period beginning in 1995 through July 2002, Baxter was issued
Corporate Cards from WTU's two Corporate Accounts, including card numbers
3782-964988- 01008 (1995-8/97) and 3782-964988-01032 (1995- 7/02).
103. During his tenure as Treasurer, Baxter used the credit cards, which
were issued for the sole purpose of conducting the official business of the
Washington Teachers' Union, to make a large number of purchases of a clearly
personal nature, including, but not limited to: purchases at bars and
nightclubs; art; clothing; theater and sporting tickets; flowers; jewelry anti
tobacco.
104. In total, Baxter's unauthorized and personal charges to WTU's Corporate
American Express Cards exceeds Two-Hundred and Sixty-Seven- Thousand Dollars
($267,000.00). Baxter did not receive authorization from WTU's Board of
Directors to make these purchases, nor did he reimburse WTU for those charges.
WTU's Board of Directors and the Union membership were not aware of this
unauthorized use of Union funds by Baxter.
105. Baxter also wrote or caused to be written checks to himself( in amounts
in excess of Two Hundred and Seventy Thousand Dollars ($270,000.00), including
checks designated as "pension payments" which were not due and owing
to Baxter and were therefore improperly made. These checks were not authorized
by WTU's Board of Directors or membership and were used to illegally convert
funds from WTU. WTU's Board of Directors and the Union membership were not
aware of this unauthorized use of Union funds by Baxter.
106. Baxter also wrote or caused to be written checks to other participants
in the illegal scheme, including Bullock, Hemphill, Holmes, Michael Martin,
Cheryl Martin, Alderman, Expressions Unlimited and Clark. Those checks were not
authorized by WTU's Board of Directors or membership and were used to illegally
convert funds from WTU's treasury. Because AFT negligently failed to exercise
its fiscal oversight responsibility, Plaintiffs and each member of the Class
proposed to be represented by them were not aware of this unauthorized use of
Union funds by Baxter. This failure resulted in an increase of losses of vast
sums of monies to Plaintiffs and each member of the Class proposed to be
represented by them.
107. Defendants Bullock, Baxter and Hemphill, as officers, agents,
representatives and employees of the Union, had a fiduciary duty to act on its
behalf in all matters associated with the conduct of Union affairs and not
appropriate and convert Union funds to personal use. These defendants breached
that duty. AFT had a duty to act on behalf of Plaintiffs and each member of the
Class proposed to be represented by them. As a result of AFT’s negligent
failure to conduct the bi-annual audits, that duty was breached to the fiscal
detriment of Plaintiffs and each member of the Class proposed to be represented
by them.
(Bullock, Baxter and Hemphill)
108. Paragraphs 1-107 are herein incorporated by reference.
109. Defendants Bullock, Baxter and Hemphill, as officers, agents,
representatives and employees of the Union, had a duty to act on its behalf in
all matters associated with the conduct of Union affairs.
110. Bullock and Baxter were elected officers of the Union who held
consecutive two-year terms since 1994. Hemphill was an at-will employee hired
in 1996.
111. Through their positions as officers, agents, representatives and
employees of the Union, Bullock, Baxter and Hemphill were placed in positions
of authority and trust and were given access to and control of WTU's treasury.
112. Bullock, Baxter and Hemphill abused their positions by knowingly
stealing, misappropriating and converting funds and property purchased with
Union funds from the Union for their own use, the use of each other, the use of
the other Defendants and others, and otherwise fraudulently misapplied Union
funds and property by diverting it to unauthorized persons, such as Holmes,
Michael Martin, Cheryl Martin, Alderman, Expressions Unlimited and Clark, and
for other unauthorized purposes and uses.
113. On October 23, 2002, on behalf of the Union, formal requests were made
to Bullock, Baxter and Hemphill, to repay WTU all of the Union funds expended
by or caused to be expended by them for personal and otherwise unauthorized
and/or non-Union purposes.
114. Subsequently, on December 23,2002, a second demand for repayment was
made to Bullock, Baxter and Hemphill.
115. Bullock, Baxter and Hemphill have not complied with these demands for
return of its property.
(Holmes)
116. Paragraphs 1-115 are herein incorporated by reference.
117. Between approximately 1998 through September 2002, Holmes received in
excess of 200 checks, ranging in amounts from $500 to $20,000, which in total
exceed One Million Two Hundred Thousand Dollars ($1,200,000.00). Those checks
were written on WTU's primary checking account and were cashed by Holmes at
WTU's bank, Independence Federal Savings Bank.
118. Upon information and belief, after cashing those checks Holmes provided
the cash proceeds to Hemphill who returned a portion of the cash to Holmes and
kept the rest of the money for unauthorized purposes, or Holmes deposited funds
into Bullock's personal bank account.
119. In addition, Holmes cashed numerous altered checks, including checks in
which the original payee’s name had been marked through and replaced with
Holmes’ name. The altered checks cashed by Holmes were, among others,
originally payable to Verizon, D.C. Treasurer, Slevin & Hart (attorney) and
Blue Cross/Blue Shield (WTU's medical insurance provider), for the payment of
WTU's legitimate business expenses.
120. Holmes cashed, deposited or otherwise made use of checks he received
knowing that the funds were proceeds of unlawful activity.
121. Holmes knew that the checks he cashed on WTU's bank accounts resulted
in the unlawful embezzlement and conversion of WTU's funds.
122. While Holmes provided services to WTU, namely driving Bullock to
appointments and performing odd jobs at WTU's office, the money he received as
a result of his participation in the illegal scheme, greatly exceeded the value
of his services to WTU.
123. Payments made to Holmes in excess of the reasonable value of his
services were made without the authorization or knowledge of Plaintiffss and
each member of the Class proposed to be represented by them.
(Michael Martin)
124. Paragraphs 1-123 are herein incorporated by reference.
125. Michael Martin, is the son-in-law of Gwendolyn Hemphill, the husband of
Cheryl Martin and, upon information and belief, was affiliated with a business
called Expressions Unlimited.
126. Michael Martin received unauthorized funds and material goods paid for
by WTU funds, personally and as an agent of Expressions Unlimited, and
conducted financial transactions with money received as the result of unlawful
activity and money laundering.
127. Michael Martin cashed, deposited or otherwise made use of unauthorized
checks totaling over Twenty-Five Thousand Dollars ($25,000.00), which were
written to him on WTU's bank accounts.
128. Additionally, Michael Martin cashed, deposited or otherwise made use of
unauthorized checks and funds totaling over Four Hundred and Fifty Thousand
Dollars ($450,000.00) which were written to Expressions Unlimited on WTU's bank
accounts.
129. Michael Martin cashed, deposited or otherwise made use of checks he
received personally and on behalf of Expressions Unlimited, knowing that the
funds were proceeds of unlawful activity.
130. Michael Martin participated in these financial transactions knowing
that he was wrongfully embezzling and converting money from WTU.
131. Payments made to Michael Martin were made without the authorization or
knowledge of Plaintiffss and each member of the Class proposed to be
represented by them
(Cheryl Martin)
132. Paragraphs 1-131 are herein incorporated by reference.
133. Cheryl Martin, is the daughter of Gwendolyn Hemphill and the wife of
Michael Martin.
134. Cheryl Martin received unauthorized funds and material goods paid for
by WTU funds and conducted financial transactions with money received as the
result of unlawful activity and money laundering.
135. Cheryl Martin cashed and deposited unauthorized checks written on WTU's
bank accounts to Errol Alderman, her husband Michael Martin and Expressions
Unlimited.
136. Cheryl Martin cashed, deposited or otherwise made use of the checks she
received on behalf of Expressions Unlimited, Michael Martin and Errol Alderman,
knowing that the funds were proceeds of unlawful activity.
137. Upon information and belief, Cheryl Martin deposited unauthorized WTU
checks made payable to Expressions Unlimited into the Annapolis Bank &
Trust bank account she shared with her husband, Michael Martin; the Expressions
Unlimited bank account at Bank of America, including the Lanham, Maryland and
Bowie, Maryland branches; and the personal bank account of Hemphill.
138. Cheryl Martin participated in these financial transactions knowing that
she was wrongfully embezzling and converting money from WTU.
139. Payments made to and Union money spent on behalf of Cheryl Martin were
made without the authorization or knowledge of WTU’s Board of Directors or
the Union membership.
(Alderman)
140. Paragraphs 1-140 are herein incorporated by reference.
141. Upon information and belief, Alderman was affiliated with a business
called Expressions Unlimited.
142. Alderman received unauthorized funds from WTU, personally and as an
agent of Expressions Unlimited, and conducted financial transactions with money
received as the result of unlawful activity and money laundering.
143. Additionally, Alderman cashed, deposited or otherwise made use of
unauthorized checks totaling over Twenty-One Thousand Dollars ($21,000.00),
which were written to him on WTU's bank accounts.
144. Alderman cashed, deposited or otherwise made use of unauthorized checks
totaling over Four-Hundred and Fifty Thousand Dollars ($450,000.00), which were
written to Expressions Unlimited on WTU's bank accounts.
145. Upon information and belief, Cheryl Martin deposited some of the
unauthorized checks received in the name of Expression Unlimited and endorsed
by Alderman into the personal bank account of Hemphill.
146. Alderman cashed, deposited or otherwise made use of checks he received
personally or on behalf of Expressions Unlimited, knowing that the funds were
proceeds of unlawful activity.
147. Alderman participated in those financial transactions knowing that he
was wrongfully embezzling and converting money from WTU.
148. Payments made to Alderman were made without the authorization or
knowledge of Plaintiffs and each member of the Class proposed to be represented
by them.
(Clark)
149. Paragraphs 1-148 are herein incorporated by reference.
150. Clark is the sister of Barbara Bullock.
151. Clark received unauthorized funds and material goods paid for by WTU
funds and conducted financial transactions with money received as the result of
unlawful activity and money laundering.
152. Clark and Bullock share a joint bank account at Sun Trust Bank, where
some of the proceeds of unauthorized checks written on WTU's bank accounts were
deposited.
153. Clark and Bullock also share a Diner's Club charge card (account number
3850- 814404-0035), on which numerous personal items were purchased by Bullock,
Clark and Clark's daughter and paid for by the Union.
154. Between the period of January 1996 through July 2002, payments were
made by WTU to Diner's Club for account number 3850-814404-0035 in excess of
One Hundred and Nineteen Thousand Dollars ($119,000.00).
155. Clark made use of unauthorized funds and material goods paid for by WTU
funds she received from Bullock, Hemphill and WTU, knowing that the goods and
funds were proceeds of unlawful activity.
156. Clark accepted funds and material goods paid for by WTU funds, knowing
that she was wrongfully embezzling and converting money from WTU.
157. Cheryl Martin participated in these financial transactions knowing that
she was wrongfully embezzling and converting money from WTU.
158. Payments made to and Union money spent on behalf of Cheryl Martin were
made without the authorization or knowledge of Plaintiffs and each member of
the Class proposed to be represented by them.
(Bullock, Baxter, Hemphill, Holmes, Michael Martin, Cheryl Martin, Alderman
and Clark)
159. Paragraphs 1-158 are herein incorporated by reference.
160. At all times, Bullock, Baxter, Hemphill, Holmes, Michael Martin, Cheryl
Martin, Alderman and Clark knew that the funds and material goods paid for by
WTU funds that were the subjects of their transactions represented the proceeds
of unlawful activity and cashed and deposited those checks with the intent of
carrying out the unlawful activity, and/or to conceal or disguise the nature,
the location, the source, the ownership or the control of the proceeds.
161. Defendants' activities are the subject of criminal investigations by
the federal government.
(Rameé Art Gallery)
162. Paragraphs 1-161 are herein incorporated by reference.
163. Rameé Art Gallery (RAG) is an art gallery located at 5427 14th
Street, N.W., in the District of Columbia.
164. Upon information and belief, the owner, Edith Buffalo, of Rameé Art
Gallery is the neighbor of Barbara Bullock.
165. Upon information and belief, defendant Bullock purchased approximately
$55,000 of artwork from RAG using a WTU credit card.
166. Upon information and belief, RAG delivered the artwork purchased on the
WTU credit card to the home of defendant Bullock.
167. RAG knew or should have known that the use of the WTU credit card was a
personal expenditure.
168. The participation of defendant RAG in the sale of artwork to defendant
Bullock and delivery to the home of defendant Bullock constitutes money
laundering.
169. Thus, defendant RAG is a co-conspirator under RICO.
(Independence Federal Savings Bank)
170. Paragraphs 1-169 are herein incorporated by reference.
171. Independence Federal Savings Bank ("IFSB") is and at all
times relevant to this case was the bank where the Washington Teacher’s Union
had its checking account.
172. At all times relevant to this complaint, IFSB cashed checks on the
account of WTU originally made payable to other legitimate payees such as PEPCO,
Verizon and other public utilities. These checks were clearly altered and made
payable to Leroy Holmes.
173. IFSB through Gretchen Calloway, nonetheless consistently cashed these
checks in breach of its contract with WTU and thus, the plaintiffs and all
those similarly situated and gave the proceeds to Holmes.
174. As a result, large sums of money belonging to the individual Plaintiffs
as well as all individuals similarly situated were improperly misappropriated
and converted and for which there is no accounting.
175. IFSB, therefore, participated in what appears to be a widespread
co-conspiracy with Leroy Holmes and the other co-conspirators.
176. Moreover, IFSB, negligently hired, trained, retained and supervised
Gretchen Calloway, the branch manager, who, with Leroy Holmes, caused the
clearly altered checks to be negotiated.
177. As a result of the negligence of IFSB, the individual Plaintiffs and
all individuals similarly situated, do not know where the monies are that were
generated as a result of the negotiation of these clearly altered checks.
178. IFSB has a duty to protect the assets it held in trust for the
individual Plaintiffs and all those similarly situated.
179. As a result of negligent hiring and supervision, ISFB was grossly
negligent in the management of WTU’s funds.
180. As a result of IFSB’s breach of its duty of care, the individual
Plaintiffs and all similarly situated individuals have suffered financial
losses and seek to be made whole by this action.
181. Wherefore, the Plaintiffs and all those similarly situated respectfully
request this Court appoint an independent auditor to conduct a forensic
examination from 1988 to the present of IFSB’s fiscal activities including,
but not limited to any transactions involving any of the named defendants as
well as Gretchen Calloway’s personal checking and/or savings account wherever
located.
(Curtis Lewis, Esquire and Curtis Lewis and Associates)
182. Paragraphs 1-180 are herein incorporated by reference.
183. Curtis Lewis is the brother of defendant, James Baxter.
184. At all times relevant to this complaint, Curtis Lewis was an attorney
who represented WTU.
185. Over the period 1994 through 1998, and 2000 through 2002, he and his
law firm, Curtis Lewis and Associates were paid approximately $1,600,000
purportedly for legal services.
186. A check dated December 13, 1996 in the amount of $10,000 was paid to
Robert Nicholas, Esquire, a member of Lewis’ law firm for which it appears,
no services were provided.
187. In addition, Curtis Lewis and Robert Nicholas were covered by WTU’s
health insurance plan at a cost to WTU of approximately 41,260 per month each
for a total cost to the teachers of $55,000 for two years.
188. Thus, Curtis Lewis and Curtis Lewis and Associates are co-conspirators
with the other individually named defendants who defrauded the individual
Plaintiffs and all similarly situated individuals and who misappropriated and
converted funds rightfully belonging to the individual Plaintiffs and all those
similarly situated.
(Goosby)
189. Paragraphs 1-188 are herein incorporated by reference.
190. James Goosby reportedly was the tax preparer for the WTU and for
Bullock, Holmes and Cheryl and Michael Martin.
191. James Goosby is not a Certified Public Accountant. He runs a business
called Goosby's Income Tax Service located in Prince Georges County, MD. Goosby,
although apparently hired by defendant Bullock to conduct the WTU audit could
not have done the audit since he was not a CPA.
192. For the years 1998, 2000 and 2001, Goosby was the outside accountant
who signed as preparer of WTU’s tax returns.
193. Upon information and belief, Goosby knew, or should have known, that at
the time of the preparation of these returns, the figures reported on these
returns were inaccurate, fraudulent and used with the intent to deceive. He
nevertheless signed them as the tax preparer knowing that they would be filed
by the WTU.
194. Goosby knew or should have known that these tax returns were used in
the furtherance of a conspiracy to convert and misappropriate funds and to
conceal the conversion and misappropriation of funds belonging to the
Plaintiffs and those similarly situated.
195. Thus, James Goosby is a co-conspirator with the other individually
named defendants who defrauded the individual Plaintiffs and all similarly
situated individuals and who misappropriated and converted funds rightfully
belonging to the individual Plaintiffs and all those similarly situated.
(Replevin)
196. As a result of criminal allegations that certain defendants
individually and in concert used WTU monies to purchase certain luxury items
for their personal use, including but not limited to clothing, fur coats,
electronics, auto repairs, beauty aids, vacations, china, crystal, and jewelry,
the government has seized these items. Because these items rightfully belong to
Plaintiffs and those similarly situated, this complaint seeks the return of
these items to Plaintiffs and those similarly situated.
(An Accounting)
197. Defendants, individually and in concert, misappropriated and converted
money from the WTU.
198. IFSB cashed checks inappropriately and negligently.
199. Because of this, Plaintiffs and those similarly situated have no true
and accurate information regarding the state of WTU’s finances. Therefore,
Plaintiffs and those similarly situated, by this complaint, request a complete
accounting of all WTU funds and assets.
COUNT I
(Violations of the Racketeer Influenced and Corrupt Organizations Act
("RICO")
200. Plaintiffs incorporates by reference, re-allege and repeat each of the
allegations set forth in paragraphs I through 199 above.
201. WTU itself, and the individual Defendants associated in fact,
collectively and in groups, as separate enterprises engaged in, or enterprises,
in fact, engaged in, or the activities of which affect, interstate commerce.
202. WTU is a non-profit labor organization having its principal place of
business at 1717 K Street, N.W., Suite 902, Washington, DC 20036.
203. WTU represents approximately 5,000 persons, consisting primarily of
Plaintiffs and each member of the Class proposed to be represented by them who
are District of Columbia public school teachers and professionals.
204. WTU's members, who pay dues to the Union, reside in the District of
Columbia, Virginia and Maryland.
205. WTU participates in interstate commerce in that, among other things, it
uses the banks to conduct financial transactions in the District of Columbia,
Virginia and Maryland; it uses the U.S. Mail to transmit information to its
members in the District of Columbia, Virginia and Maryland and to conduct
business throughout the region and throughout the United States; it contracts
for goods and services in the District of Columbia and the greater United
States; and its officers, employees and members travel throughout the United
States on Union business.
206. Defendants were employed by or associated with WTU.
207. Defendants conducted or participated directly and/or indirectly in the
affairs of WTU through a pattern of racketeering activity.
208. Defendants were associated with the enterprise in fact.
209. Defendants conducted or participated directly and/or indirectly in the
affairs of the enterprise in fact through a pattern of racketeering activity.
210. Between on or about July 1, 1994 through approximately September 2002,
Bullock served as the elected President of the Washington Teachers Union.
211. Between on or about July 1, 1996 through approximately September 2002,
Baxter actively served as the elected Treasurer of the Washington Teachers
Union.
212. Between 1996 through approximately September 2002, Hemphill served as,
Special Assistant to the President and Legislative Representative of the
Washington Teachers Union.
213. Between 1998 through approximately September 2002, Holmes was employed
by the Washington Teachers Union in the capacity as Bullock's driver.
214. Cheryl Martin is the daughter of Hemphill and during the period
beginning in approximately November 2000 through on our about June 8, 2001,
Cheryl Martin was a temporary employee of the Washington Teachers' Union.
215. Michael Martin is Cheryl Martin's husband, the son-in-law of Hemphill,
and, upon information and belief, was affiliated with a business called
Expressions Unlimited. Michael Martin received payments from WTU, personally in
excess of Twenty-Five Thousand ($25,000.00) and on behalf of Expressions
Unlimited, in excess of Four Hundred and Fifty Thousand Dollars ($450,000.00),
for services he and Expressions Unlimited allegedly performed on behalf of the
Union.
216. Upon information and belief, Alderman was affiliated with a business
called Expressions Unlimited. Alderman personally received payments from the
Union in excess of Twenty-One Thousand Dollars ($21,000.00) and on behalf of
Expressions Unlimited in excess of Four Hundred and Fifty Thousand Dollars
($450,000.00), for services he and Expressions Unlimited allegedly performed on
behalf of the Union.
217. Clark is Bullock's sister and received payments from WTU, personally
and on behalf of Gwen's of Columbia, in excess of Fourteen Thousand Six Hundred
Dollars ($14,600.00), for services she allegedly performed on behalf of the
Union.
218. Bullock, Baxter and Hemphill participated in the conduct of WTU's
affairs by issuing or causing to be issued checks on WTU's behalf, including
checks for authorized Union business, as well as the unauthorized activities
that form the basis of this complaint.
219. Bullock, Baxter and Hemphill further participated in the conduct of
WTU's affairs by carrying out their duties as President, Treasurer and Special
Assistant to the President /Legislative Representative, respectively.
220. Holmes participated in the conduct of WTU's affairs by driving Bullock
to Union appointments and functions, performing various maintenance and
administrative duties at WTU's office and conducting unauthorized financial
transactions with checks written on WTU's accounts.
221. Cheryl Martin directly participated in the conduct of WTU's affairs as
a temporary employee during the period beginning in approximately November 2001
through approximately June 8, 2001, and indirectly by conducting financial
transactions with checks written on WTU's bank accounts to Michael Martin,
Errol Alderman and Expressions Unlimited.
222. Michael Martin and Errol Alderman participated in the conduct of WTU's
affairs by receiving payments for services allegedly performed by them and by
Expressions Unlimited, on behalf the Union.
223. Clark participated in the conduct of WTU's affairs by conducting
financial transactions with checks written on WTU's bank accounts to her and to
her company Gwen's of Columbia, on behalf the Union.
224. Bullock's, Baxter's and Hemphill's actions, in knowingly issuing or
causing to be issued over Five Million Dollars ($5,000,000.00) in unauthorized
funds from WTU's accounts to and for the benefit of themselves, Holmes,
Alderman, Michael Martin, Expressions Unlimited and Clark; knowingly using WTU
credit accounts from 1995 through July 2002 to make personal and otherwise
unauthorized purchases; and orchestrating and participating in a scheme to
embezzle and convert WTU's funds to their personal use and to the use of others
constitutes participation in a pattern of racketeering activity as defined by
18 U.S.C. 1961 et seq.
225. Holmes', Alderman's, Michael Martin's, Cheryl Martin's and Clark's
actions, including: on numerous occasions cashing, depositing or otherwise
making use of unauthorized checks issued or caused to be issued by Bullock,
Baxter and Hemphill and written on WTU's accounts, with knowledge that the
funds and property were the proceeds of unlawful activity, with the intent to
carry out the unlawful activity and knowing that the transactions were designed
to conceal and disguise the nature, source, ownership or control of the
proceeds; on numerous occasions accepting delivery of goods that were purchased
without authorization on Union credit cards with knowledge that the funds and
property were the proceeds of unlawful activity, with the intent to carry out
the unlawful activity and knowing that the transactions were designed to
conceal and disguise the nature, source, ownership or control of the proceeds;
on numerous occasions submitting invoices for payment to WTU for services of a
personal nature allegedly performed for Bullock; and participation in a
conspiracy to knowingly and illegally convert and embezzle WTU's funds,
constitutes participation in a pattern of racketeering activity as defined by
18 U.S.C. 1961 et seq.
226. On July 1, 1998, Bullock, Baxter and Hemphill collectively issued or
caused to be issued two unauthorized checks written on WTU's bank to Leroy
Holmes. Each check was written in the amount of Four Thousand Two-Hundred and
Forty Dollars ($4,240.00), for a total in excess of Eight Thousand Dollars
($8,000.00) and was cashed, deposited or otherwise made use of by Holmes.
227. On September 15, 2000, Bullock, Baxter and Hemphill collectively issued
or caused to be issued an unauthorized check written on WTU's bank to Leroy
Holmes in the amount of Twenty Thousand Dollars ($20,000.00).
228. Holmes cashed, deposited or otherwise made use of these checks, knowing
that the money was unlawfully embezzled and converted from WTU’s treasury and
with the intent to carryout out the unlawful activity and to disguise the true
source, ownership and control of the funds in that he provided the cash
proceeds to Hemphill who returned a portion of the cash to Holmes and retained
the balance of the cash.
229. The above-described activity by Holmes was part of a pattern that
extended from the period beginning on or before January 1998 through
approximately September 2002, in which Holmes continually cashed unauthorized
checks written on WTU's accounts, returning the proceeds to Hemphill or
depositing them into the personal bank account of Bullock, to assist in the
conversion of WTU's funds and to disguise the nature, source and true ownership
of those funds.
230. Additionally, many of the checks issued or caused to be issued by
Bullock, Baxter and Hemphill and cashed by Holmes were purposefully written in
a way to avoid federal transaction reporting requirements, in that multiple
checks, each under the amount of Ten Thousand Dollars ($10,000.00) were written
to and cashed by Holmes on the same day or within a few days of each other, the
total of which exceeded the Ten Thousand dollar ($10,000.00) reporting
requirement. However, had Defendant AFT conducted biennial audits or minimal
fiscal oversight, these transactions would have been discovered. Failure to do
so constitutes negligence on the part of Defendant AFT.
231. As examples of the conduct alleged above, on April 8, 2001 Bullock,
Baxter and Hemphill collectively issued or caused to be issued two unauthorized
checks written on WTU's bank to Leroy Holmes; check number 5052 in the amount
of Nine Thousand Three Hundred and Seventy-Five Dollars ($9,375.00) and check
number 5056 in the amount of Five Thousand Eight-Hundred and Seventy-Five
Dollars and Forty-Six cents ($5,875.46). Upon information and belief, these
checks, issued on the same day and together, totaling over Fifteen Thousand
Dollars ($15,000.00) were cashed by Holmes at Independence Federal Savings
Bank. Additionally, upon information and belief, checks written on WTU's
accounts and made payable to Expressions Unlimited and bearing Errol Alderman's
signature, which totaled more than Ten Thousand Dollars ($10,000.00) were
deposited into Hemphill's personal bank account.
232. The above-described acts carried out by Bullock, Hemphill, Baxter,
Holmes, Alderman, Michael Martin, Cheryl Martin, Alderman and Clark, constitute
money laundering in violation of 18 U.S.C. § 1956, knowingly engaging in
monetary transactions in property derived from illegal activity, in violation
of 18 U.S.C. § 1957, and embezzlement from a labor union, in violation of 29
U.S.C. § 501(c), and form a predicate act for a civil RICO violation under 18
U.S.C. §§ 1 962(c)-(d). There are numerous other similar instances, which
constitute other predicate acts under RICO.
233. As a result of the illegal scheme to convert and embezzle WTU's funds
for their personal benefit, their knowing engagement in monetary transactions
derived from unlawful activity and their money laundering, defendants, through
the use of WTU as their enterprise, caused serious injury to WTU, by depriving
it of funds necessary for the operation of the Union, and by subjecting WTU to
claims by creditors.
234. WTU has suffered a direct and substantial monetary loss as a result of
the enterprise's activities, exceeding Five Million Dollars ($5,000,000.00).
WTU has also suffered in that its Corporate Credit Card accounts have been
closed by American Express, the Union has been sued by American Express for
non-payment of the accounts misused by Defendants Bullock, Baxter and Hemphill
and the Defendants activities have damaged WTU's credit.
COUNT II
(Conversion)
35. Plaintiffs incorporate by reference, re-alleges and repeats each of the
allegations set forth in paragraphs 1 through 234 above.
236. Defendants Bullock, Baxter and Hemphill had access to and control of
WTU's bank and credit card accounts to carry out their duties of President and
Treasurer, respectively, as required by the Constitution and By-Laws of the
Washington Teachers' Union. Defendant Hemphill had access to and responsibility
for properly maintaining WTU's bank accounts and credit card accounts in
connection with her position as Special Assistant to the President.
237. Continuously since at least 1995, Defendants Bullock, Baxter and
Hemphill took advantage of their access to and control over Union funds to
issue unauthorized checks to themselves and the other Defendants; to make
personal and unauthorized purchases on WTU's American Express accounts; and to
pay the American Express bills associated with these personal and unauthorized
purchases with money from WTU's treasury.
238. The money and property taken by the Defendants were at all times the
property of WTU and its members and were to be used to conduct WTU's official
business.
239. On October 23, 2002, formal requests were made of Bullock, Baxter and
Hemphill on behalf of the Union, for repayment to WTU of all Union funds
expended by or caused to be expended by them for personal and otherwise
unauthorized and/or non-Union purposes.
240. Subsequently, on December 23,2002, a second demand for repayment was
made to Bullock, Baxter and Hemphill.
241. Bullock, Baxter and Hemphill have not complied with WTU's demands for
return of its property.
242. Bullock's, Baxter's and Hemphill's retention of WTU's property is
intentional, without permission or justification, and constitutes conversion of
WTU's property.
243. WTU is entitled to immediate possession of these items and funds.
244. WTU's property had a value in excess of Five Million Dollars
($5,000,000.00) at the time of the conversion.
COUNTS Ill and IV
(Civil Conspiracy and RICO Conspiracy)
245. Plaintiffs incorporate by reference, re-alleges and repeats each of the
allegations set forth in paragraphs I through 244 above.
246. Without the consent of WTU, Defendants Bullock, Baxter, Hemphill,
Holmes Michael Martin, Cheryl Martin, Alderman and Clark entered into an
agreement with and among each other to wrongfully embezzle and convert WTU’s
funds to their personal use, and that of each other.
247. Without the consent or approval of WTU, Hemphill, Baxter and Bullock
unlawfully conspired to, and actually issued or caused to be issued checks to
themselves, to each other and to Holmes, Michael Martin, Alderman, and
Expressions Unlimited and they negotiated these checks all in furtherance of
Defendants' conspiracy to embezzle and convert WTU's funds to their personal
use.
248. Examples of the transactions through which Defendants furthered their
conspiracy include:
a. Without the consent or approval of WTU, on April 22, 2002, Hemphill,
Baxter and Bullock collectively issued or caused to be issued check number 1180
in the amount of Eleven Thousand Five-Hundred Dollars ($11,500.00) to Bullock.
b. From on or before January 1995 through approximately September 2002,
Hemphill, Bullock and Baxter continued to issue or cause to be issued
unauthorized checks to Bullock and to merchants for the purchases of goods and
services solely for Bullock's personal benefit, including checks for
custom-made clothing and checks to Diner's Club to pay for meals, hotels,
designer clothing and jewelry.
c. From on or about January 1995 through approximately September 2002,
Bullock deposited, cashed or otherwise made use of the checks and the resulting
proceeds, which total in excess of Three Hundred and Eighty-One Thousand
Dollars ($381,000.00).
d. Without the consent or approval of WTU, on June 14, 2002, Hemphill,
Baxter and Bullock collectively issued or caused to be issued check number 1255
in the amount of Nine Thousand Eight-Hundred and Seventy-Nine Dollars and
Fifty-Six cents ($9,879.56) to Hemphill.
e. From on or before December 1996 through approximately September 2002,
Hemphill, Bullock and Baxter continued to issue or cause to be issued
unauthorized checks to Hemphill.
f. From on or about December 1996 through approximately September 2002,
Hemphill deposited, cashed or otherwise made use of the checks and the
resulting proceeds, which total in excess of One Hundred and Eighty-One
Thousand Dollars ($181,000.00).
g. Without the consent or approval of WTU, on June 19, 2002, Hemphill,
Baxter and Bullock collectively issued or caused to be issued check number 1347
in the amount of Nine Thousand Nine-Hundred and Fifty-Eight Dollars and Nine
cents ($9,958.09) to Baxter.
h. From on or before February 1995 through approximately September 2002,
Hemphill, Bullock and Baxter continued to issue or cause to be issued
unauthorized checks to Baxter.
i From on or about February 1995 through approximately September 2002,
Baxter deposited, cashed or otherwise made use of the checks and the resulting
proceeds, which total in excess of Two Hundred and Seventy Thousand Dollars
($270,000.00).
j. Without the consent or approval of WTU, on June 19, 2002, Hemphill,
Baxter and Bullock collectively issued or caused to be issued check number 1275
in the amount of Seven Thousand Six-Hundred and Thirteen Dollars ($7,613.00) to
Alderman personally and individually.
k. Without the consent or approval of WTU, on July 11, 2002, Hemphill,
Baxter and Bullock collectively issued or caused to be issued check number 1400
in the amount of Three Thousand Five Hundred Dollars ($3,500.00) to Michael
Martin.
l. Without the consent or approval of WTU, on May 31, 2001, Hemphill, Baxter
and Bullock collectively issued or caused to be issued check number 5250 in the
amount of Seven Thousand Seven Hundred Dollars ($7,700.00) to Expressions
Unlimited.
m. Checks number 1275, 1400 and 5250 were not an authorized expenditures and
were written unlawfully in furtherance of Defendants' conspiracy to embezzle
and convert WTU's funds to their personal use.
n. From on or before July 1998 through approximately September 2002,
Hemphill, Bullock and Baxter continued to disseminate unauthorized checks to
Alderman and Michael Martin personally and individually, and on behalf of
Expressions Unlimited.
o. From on or about July 1998 through approximately September 2002, Michael
Martin, deposited, cashed or otherwise made use of the checks and the resulting
proceeds made payable to him personally, which total in excess of Twenty-Five
Thousand Dollars ($25,000.00); Alderman deposited, cashed or otherwise made use
of the checks and the resulting proceeds made payable to him personally, which
total in excess of Twenty-One Thousand Dollars ($21,000.00), and Michael Martin
and/or Alderman deposited, cashed or otherwise made use of the checks and the
resulting proceeds made payable to Expressions Unlimited, which total in excess
of Four Hundred and Fifty Thousand Dollars ($450,000.00).
p. Without the consent or approval of WTU, on October 11, 2001 Hemphill,
Baxter and Bullock collectively issued or caused to be issued check number 5525
in the amount of Nine Thousand Eight-Hundred and Seventy Dollars ($9,870.00) to
Holmes.
q. Check number 5525 \1HS not an authorized expenditure and was written
unlawfully in furtherance of Defendants' conspiracy to embezzle and convert
WTU's funds to their personal use.
r. From on or before January 1998 through approximately September 2002,
Hemphill, Bullock and Baxter continued to disseminate unauthorized checks to
Holmes.
s. From on or about January 1998 through approximately September 2002,
Holmes deposit, cashed or otherwise made use of the checks and the resulting
proceeds, which total in excess of One Million Two Hundred Thousand Dollars
($1,200,000.00).
t. Upon information and belief, Holmes further participated in the
conspiracy by cashing checks written on WTU's accounts, issued by Hemphill and
signed by Baxter and Bullock, and returned the cash proceeds to Hemphill.
u. Upon information and belief, Holmes further participated in the
conspiracy by depositing the funds from checks written on WTU's accounts,
issued or caused to be issued by Baxter, Bullock and Hemphill into Bullock's
personal bank accounts.
249. Upon information and belief, Cheryl Martin participated in the
conspiracy to embezzle and convert WTU's funds for her personal use and the use
of the other Defendants by depositing checks written on WTU's accounts issued
by Hemphill, authorized for payment by Bullock and Baxter, and made payable to
Michael Martin, Alderman and Expressions Unlimited, into Expressions
Unlimited's bank account, into the bank accounts of Michael and Cheryl Martin,
and into the personal bank account of Hemphill, with knowledge that the funds
and property were the proceeds of unlawful activity.
250. Upon information and belief, Clark participated in the conspiracy to
embezzle and convert WTU's funds for her personal use and the use of the other
Defendants by depositing checks written on WTU's accounts, issued by Hemphill
and authorized for payment by Bullock and Baxter, into the personal bank
account held jointly in the name of Bullock and Clark at Sun Trust Bank, and by
accepting items purchased on WTU's credit cards, with knowledge that the funds
and property were the proceeds of unlawful activity.
251. The above-described acts, carried out by Bullock, Baxter, Hemphill,
Holmes, Michael Martin, Cheryl Martin, Alderman and Clark were done pursuant to
and in furtherance of a common scheme to embezzle and convert funds from WTU to
their personal use and constitute common law civil conspiracy.
252. The above described acts, carried out by Bullock, Baxter, Hemphill
Holmes, Michael Martin, Cheryl Martin, Alderman and Clark were done pursuant to
and in furtherance of a common scheme to conduct or participate in the conduct
of an enterprise' affairs through a pattern of racketeering activity while
Defendants were employed by, or associated with the enterprise, or the combined
Defendants or groups of Defendants associated it fact, that were engaged in, or
the activities of which affected, interstate commerce.
253. As a result of Defendants' unlawful acts and AFT’s negligent failure
to maintain oversight of the fiscal operations, WTU has suffered significant
economic injury, including the loss of Five Million Dollars ($5,000,000.00)
from its treasury.
COUNT V
(Aiding and Abetting)
254. Plaintiffs incorporate by reference, re-alleges and repeats each of the
allegations set forth in paragraphs I through 253 above.
255. Defendants Bullock, Baxter, Hemphill, Holmes, Michael Martin, Cheryl
Martin, Alderman and Clark each played a role and provided assistance to each
other in carrying out their unlawful scheme to embezzle and convert WTU's funds
to their personal use, and that of each other.
256. Bullock, Baxter and Hemphill each played an important role in
disseminating checks written on WTU's bank accounts to each other and to
Holmes, Michael Martin, Cheryl Martin, Alderman, Expressions Unlimited and
Clark.
257. Bullock, with full knowledge of the unlawful scheme issued or caused to
be issued unauthorized checks in excess of One Million Eight-Hundred and
Ninety-Four Thousand Dollars ($1,894,000.00) to herself and to the other
Defendants and made personal and otherwise unauthorized charges to WTU's credit
cards issued to her.
258. Hemphill, with full knowledge of the unlawful scheme and awareness of
her role, wrote and issued or caused to be issued unauthorized checks in excess
of One Million Eight- Hundred and Ninety-Four Thousand Dollars ($1,894,000.00)
to herself and to the other Defendants, kept WTU's accounts and made personal
and otherwise unauthorized charges to WTU's credit cards issued to her.
259. Hemphill also affixed the signature stamp of Bullock to the checks
issued to herself, Baxter, Bullock, Holmes, Michael Martin, Cheryl Martin,
Alderman, Clark and Expressions Unlimited.
260. Bullock, with full knowledge of the unlawful scheme and awareness of
her role, approved and directed the issuance of unauthorized checks to herself
and to the other Defendants and made personal and otherwise unauthorized
charges to WTU's credit cards issued to her.
261. Baxter, with full knowledge of the scheme and awareness of his role,
approved and issued or caused to be issued unauthorized checks in excess of One
Million Eight-Hundred and Ninety-Four Thousand Dollars ($1,894,000.00) to
himself and to the other Defendants and made personal and otherwise
unauthorized charges to WTU's credit cards issued to him.
262. Holmes, with full knowledge of the unlawful scheme and awareness of his
role, cashed over 200 checks written to him on WTU's accounts since on or about
January 1998, totaling over One Million Two Hundred Thousand Dollars
($1,200,000.00) and provided the proceeds to Hemphill who returned a portion of
the cash proceeds to Holmes and kept the remainder for unauthorized purposes,
or Holmes deposited proceeds from the unauthorized checks made payable to him
into Bullock's personal bank account.
263. Michael Martin, with full knowledge of the unlawful scheme and
awareness of his role, cashed, deposited, or otherwise made use of unauthorized
checks written on WTU's bank accounts to him personally in excess of
Twenty-Five Thousand Dollars ($25,000.00) and in the name of Expressions
Unlimited in excess of Four Hundred and Fifty Thousand Dollars ($450,000.00).
264. Cheryl Martin, with full knowledge of the unlawful scheme and awareness
of her role, cashed, deposited, or otherwise made use of unauthorized checks
written on WTU's bank accounts to Michael Martin, Expressions Unlimited and
Errol Alderman and received goods from unauthorized purchases made on WTU's
American Express cards.
265. Clark, with full knowledge of the unlawful scheme and awareness of her
role, cashed, deposited, or otherwise made use of unauthorized checks written
on WTU's bank, including making deposits of unauthorized checks written on
WTU's accounts into the Bullock-Clark joint personal bank accounts at SunTrust
Bank in Virginia and Crestar Bank in Bethesda, Maryland, and received goods
from unauthorized purchases made on WTU's credit cards.
266. The above-described acts carried out by Bullock, Baxter, Hemphill,
Holmes, Michael Martin, Cheryl Martin, Alderman and Clark provided aid to each
other and substantially assisted the embezzlement and conversion of WTU's funds
to Defendants and constitute common law aiding and abetting and aiding and
abetting in violation of 18 U.S.C. § 1 962(c).
267. As a result of Defendants' unlawfu1 acts and the negligent failure to
maintain diligent fiscal oversight responsibility, WTU has suffered significant
economic injury, including the loss of Five Million Dollars ($5,000,000.00).
COUNT VI
(Fraud)
268. Plaintiffs incorporate by reference, re-alleges and repeats each of the
allegations set forth in paragraphs 1 through 267 above.
269. Bullock, Baxter and Hemphill, as officers and employees of the Union,
had a duty to report accurate information about the financial condition of WTU
to Plaintiffs and each member of the Class proposed to be represented by them.
270. Despite that duty, Bullock, Baxter and Hemphill falsely represented and
concealed material information about WTU's financial condition, from Plaintiffs
and each member of the Class proposed to be represented by them, including, but
not limited to: the amounts of money paid to Bullock, Baxter, Hemphill and
Holmes, which exceeded the amount Defendants reported to WTU and to government
officials; the recipients, amounts and nature of checks written on WTU's bank
accounts to Holmes, Michael Martin, Alderman, Clark and others; the amounts,
Union purposes, recipients and nature of purchases made on WTU's American
Express credit cards; the purposes for which WTU funds were being spent; and
the status of payment of WTU' s obligations to vendors and affiliates.
271. Bullock, Baxter and Hemphill further falsely represented and concealed
material information about WTU's financial condition from Plaintiffs and each
member of the Class proposed to be represented by them, filing false and
misleading reports with government agencies, including the filing of false LM-2
reports with the Department of Labor and the filing of false tax forms with the
IRS.
272. Pursuant to The Labor-Management Reporting and Disclosure Act, WTU is
required to submit annual LM-2 Reports to the Department of Labor, certifying
certain financial information pertaining to the Union. Reports, including, but
not limited to the LM-2 for the period October 1, 2000 through September 30,
2001, signed under penalties of perjury by Bullock and Baxter and submitted to
the Labor Department on behalf of WTU, contained material false and misleading
information.
273. The LM-2 report for the period October 1, 2000 through September 30,
2001, signed by Bullock and Baxter and submitted to the Labor Department on
behalf of WTU, for example, included numerous misrepresentations including the
extensive under-reporting of cash disbursements to WTU officers and employees.
274. In addition, each quarter, WTU was required to file form 941 with the
Internal Revenue Service ("IRS"), reporting the income, FICA, social
security and Medicare taxes and payments withheld from employees' paychecks and
Form 990, Return of Organization Exempt from Income Tax, with the IRS reporting
such information as the compensation paid to officers, directors and key
employees, deferred compensation, expense account payments and payments and
contributions to the organization's benefit plans.
275. WTU's form 941 filed with the IRS did not report the wages paid to at
least two employees- who were paid in cash. Furthermore, WTU's Form 990 for
1998 reported no compensation for officers and Forms 990 for 2000 and 2001
drastically underreported the illegal and inappropriate compensation taken from
WTU by Bullock and Baxter.
276. Bullock, Baxter and Hemphill signed and filed or caused to be filed
forms 941 and 990 with the IRS, knowing that those forms contained material
misrepresentations.
277. Bullock, Baxter and Hemphill employed the services of an accountant,
James Goosby, to further assist in their concealment of WTU's true financial
condition. Together with Goosby, Bullock, Baxter and Hemphill prepared and
assisted in the preparation of false financial statements, tax forms and LM-2
reports.
278. Plaintiffs relied on Defendant Bullock's, Baxter's and Hemphill's
representations that WTU's bills were being paid, per capita payments to AFT
were up-to-date and reports filed on behalf of WTU with federal and local
authorities contained accurate information, and its reliance was justified.
279. These and other misrepresentations and omissions were made
intentionally by Bullock, Baxter and Hemphill, with the intent to conceal the
true financial condition of the Union so that they, along with the other
Defendants, could continue the wrongful embezzlement and conversion of WTU's
funds.
280. Defendant Bullock's, Baxter's and Hemphill's misrepresentations and
omissions were material, in that they failed to disclose the actual recipients
of WTU's funds; the delinquent condition of many of WTU's accounts, including
WTU's American Express accounts, rent and per capita payments to AFT.
281. Plaintiffs and each member of the Class proposed to be represented by
them could not have discovered the true financial condition of WTU because
Defendants Bullock, Baxter and Hemphill controlled the financial functions of
the Union, provided false information in the form of inaccurate budgets,
financial statements LM-2 reports and tax filings, and continually
misrepresented, concealed and omitted material information about WTU's
financial condition to the Board of Directors, Board of Trustees and the
members, both on their own initiative and upon inquiry. However, had AFT
performed its mandated fiscal oversight responsibility, with biennial audits
and even nominal fiscal oversight, the true financial picture of WTU would have
been obvious.
282. As a result of Defendant Bullock's, Baxter's and Hemphill's
misrepresentations omissions and concealment, Plaintiffs has suffered damages,
including the loss of over Four Million One Hundred Thousand Dollars
($4,100,000.00) from its treasury.
COUNT VII
(Breach of Fiduciary Duty Pursuant to Common Law and 29 U.S.C. § 501)
(AFT, Bullock, Baxter and Hemphill)
283. Plaintiffs incorporate by reference, re-alleges and repeats each of the
allegations set forth in paragraphs 1 through 282 above.
284. AFT has fiscal responsibility for and oversight of WTU. As a result of
this, AFT owed a fiduciary duty to Plaintiffs and each member of the Class
proposed to be represented by them, obligating them to conduct, at a minimal,
biennial audits of WTU.
285. AFT breached that duty by negligently failing to conduct biennial
audits or minimum fiscal oversight of WTU and its officers.
286. As a result of AFT's negligent failure to perform its fiscal oversight
responsibility, AFT breached its fiduciary duty to Plaintiffs and each member
of the Class proposed to be represented by them.
287. Bullock and Baxter, as officers of the Union, and Hemphill, as the
employee with responsibility for financial matters, owed a fiduciary duty to
Plaintiffs and each member of the Class proposed to be represented by them,
obligating them to hold WTU's money and property solely for the benefit of
Plaintiffs and each member of the Class proposed to be represented by them, and
not to use WTU's funds for unauthorized purposes, including, but not limited
to, wholly personal uses.
288. Bullock, Baxter and Hemphill each breached that duty by conspiring to
and engaging in a scheme to embezzle WTU funds and convert those funds to their
personal use or the use of the other Defendants; charging personal expenses to
WTU credit cards without reimbursement to WTU or authorization from WTU's
Executive Board; writing Union checks to themselves; and writing and causing to
be written WTU checks to Holmes, Michael Martin, Cheryl Martin, Alderman,
Expressions Unlimited and Clark for goods and services unrelated to Union
business and/or for the wholly personal benefit of Defendants.
289. As part of its obligations to its membership, WTU was required to
submit accurate financial statements and a written budget annually to its
membership. Bullock and Baxter failed to submit accurate budgets and financial
statements to WTU's members.
290. Bullock and Baxter also breached their duty to Plaintiffs and each
member of the Class proposed to be represented by them by filing and causing to
be filed false and misleading reports regarding WTU's financial condition and
WTU officers' and employees' compensation to federal and local authorities,
including the Internal Revenue Service and the United States Department of
Labor.
291. Additionally, Bullock, Baxter and Hemphill breached their duty to
Plaintiffs and each member of the Class proposed to be represented by them to
ensure that the proper financial and accounting procedures were being followed
by WTU.
292. Additionally, AFT breached their duty to Plaintiffs and each member of
the Class proposed to be represented by them to ensure that the proper
financial and accounting procedures were being followed by WTU.
293. These acts constitute a breach of fiduciary duty under common law and
pursuant to 29 U.S.C. § 501(a).
294. Plaintiffs and each member of the Class proposed to be represented by
them, have been significantly harmed by AFT’s, Bullock's, Baxter's and
Hemphill's breaches because WTU is the subject of two lawsuits recently filed
in the District of Columbia as a result of their breaches; has retained
attorneys and expended significant funds to address the legal issues faced by
the Union as a result of Bullock's and Baxter's breaches; and is missing sums
in excess of Five Million Dollars ($5,000,000.00) from its treasury.
295. As a result of AFT’s negligent failure to perform its fiduciary
functions, Plaintiffs and each member of the Class proposed to be represented
by them have suffered damage in excess of $4,1000.00 from the treasury of WTU.
REQUEST FOR RELIEF
WHEREFORE, in connection with each and every count identified above,
Plaintiffs and each member of the Class proposed to be represented by them to
ensure that the proper financial and accounting procedures were being followed
by WTU, demand judgment against Aft, Bullock, Baxter Hemphill, Holmes, Michael
Martin, Cheryl Martin, Alderman and Clark, jointly and severally, for:
A. An immediate, independent, court ordered accounting of the funds of the
Washington Teachers Union from 1997 through the present.
B. The immediate restoration of the constitution of the Washington Teachers
Union and the naming of a Special Master to conduct the business of the Union
pending the outcome of this suit.
C. Compensatory damages in the amount of the value of the property
\wrongfully, embezzled and converted from the Union and resulting from the
Defendants' conversion, civil conspiracy, aiding and abetting, breach of
fiduciary duty and fraud, plus interest and costs.
D. Compensatory damages for all expenses and costs the Union has incurred
by virtue of Defendants' misconduct, including, but not limited to amounts
spent defending, and liability that may be incurred from, suits by creditors
seeking recovery based upon Defendant's misconduct.
E. Compensatory damages equal to the amount of the checks that were
illegally misappropriated and improperly cashed Independence Federal Savings
Bank and punitive damages in the amount of One Hundred Million Dollars
($100,000,000.00) against Independence Federal Savings Bank.
F. All monies illegally withheld from the teachers plus interest.
G. Treble damages and attorneys fees resulting from the losses sustained by
Plaintiffs and each member of the Class, as a result of Defendants' violations
of 18 U.S.C. §1961 et seq., plus interests and costs; and
H. The repayment of the loan including interest made to WTU to repay the
overcharged dues paid by Plaintiffs and all similarly situated, plus interest.
I. Any other just and equitable relief the Court deems appropriate.
Respectfully submitted,
Janai C. Reed , LEAD COUNSEL
1818 Eleventh Street, N.W.
Washington, DC 20001
(202) 588-8801
(202) 248-0785 (fax)
(202) 331-8757 (fax)
Harold Brazil
1015 18th Street, N.W.
Suite 801
Washington, D.C. 20036
(202) 429-1727 (office)
(202) 427-3232 (cell)
(202) 429-1728 (fax)
Attorneys for Plaintiffs
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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
COLUMBIA
Civil Action No. 1:03CV00261
George Parker
3305 Duck Court
Upper Marlboro, MD 20772
Gloria Guess
4019 36th Street
Mt. Rainier, MD 20712
Alfred E. Hubbard
7706 13th Street, N.W.
Washington, D.C. 20012
William F. Rope
3815 Woodley Road, N.W.
Washington, DC
Plaintiffs, (on their own behalf and on behalf of those similarly
situated)
v.
American Federation of Teachers AFT
Sandra Feldman, President
555 New Jersey Avenue, N.W.
Washington, DC 20001
Ester Hankerson, Individually and as Executive Board Member
Washington Teachers Union – Local #6
1717 K Street, NW
Washington, DC 20036
Barbara Bullock, in her official capacity as President of the Washington
Teachers Union
1221 Massachusetts Avenue, N.W.
Apartment 1021
Washington, DC 20001
Gwendolyn M. Hemphill, in her official capacity as Special Assistant to the
President
1919 Yorktown Road, N.W.
Washington, DC 20001
James O. Baxter, II, in his official capacity as Treasurer of Washington
Teachers Union
1307 Lark Lane
Fort Washington, MD 20744
Leroy Holmes, in his official capacity as agent for Barbara Bullock
11101 Bennington Drive
Upper Marlboro, MD 20774
Errol Alderman, individually and D/b/a/ Expressions Unlimited
2300 Pattern Bond Drive
Silver Spring, MD 20902
Michael Martin, Individually and D/b/a Expressions Unlimited
1200 Quartette Lane
Bowie, MD 20720
Cheryl Martin
1200 Quartette Lane
Bowie, MD 20720
Gwendolyn B. Clark
307 Yoakum Parkway, #711
Alexandria, VA 22304
Independence Federal Savings Bank, as Fiduciary for Washington Teachers
Union
1229 Connecticut Avenue, N.W.
Washington, D.C. 20036
Rameé Art Gallery
5427 14th Street, N.W.
Washington, DC 20011
Curtis Lewis, Esquire
Curtis Lewis and Associates
733 15th Street, N.W.
Washington, DC 20005
James Goosby
Goosby Income Tax Service
3311 Hubbard Road
Landover, MD 20785
MOTION FOR CLASS ACTION CERTIFICATION
COMES NOW plaintiffs by and through undersigned counsel and respectfully
moves this court to certify this matter as a class action. The following
representations are made in support of this request:
1. This is a complaint for damages brought by four individual teachers, all
members of the American Federation of Teachers ("AFT") and the
Washington Teachers Union ("WTU").
2. The complaint seeks damages due to the plaintiffs caused by the
conversion and misappropriation of funds rightfully belonging to the plaintiffs
and all similarly situated individuals and for the breach of a fiduciary duty
by the AFT and certain individual defendants owed the plaintiffs and those
similarly situated.
PARTIES
CLASS ACTION ALLEGATIONS
3. Defendant, the American Federation of Teachers, AFL-CIO, is a, non-profit
labor union and parent organization of the local Washington Teachers Union (WTU)
having its principal place of business at 555 New Jersey Avenue, N.W.,
Washington, DC 20001. AFT is an international labor organization representing
local unions primarily made-up of public and private school teachers,
paraprofessionals and higher education faculty. Members of the local unions
chartered by the AFT are also members of the AFT. AFT owes a fiduciary duty to
its members.
4. The four individually named and similarly situated individuals are all
teachers in the District of Columbia Public School System and all members of
the American Federation of Teachers and the Washington Teachers Union.
5. There are over 5,000 similarly situated individuals who are members of
the Washington Teachers Union and the American Federation of Teachers. As such,
it is impracticable to join all interested parties, i.e. teacher members
individually to this lawsuit.
6. The American Federation of Teachers has acted uniformly with respect to
each individual teacher that is a potential class member.
7. The actions of each of the individually named defendants have affected
each individual potential member of the class in a uniform way.
8. Each individually named plaintiff and each member teacher of the American
Federation of Teachers and the Washington Teachers Union is entitled to recover
monies illegally misappropriated by the individually named defendants –
monies rightfully belonging to every member of the Washington Teachers Union of
which the individually named plaintiffs are members and to the union itself.
9. Every allegation of a breach of the fiduciary duty of the American
Federation of Teachers and misappropriation of funds by the individually named
defendants is common to each and every member of the Washington Teachers Union
and the individually named plaintiffs who are representative thereof.
10. Defendant Barbara A. Bullock ("Bullock") is an individual who
resides at 1221 Massachusetts Avenue, N.W., #1021. Washington, DC 20005.
Bullock served as the elected President of the Washington Teachers’ Union
from on or about July 1, 1994 through on or about September 2002.
11. During the time she served as an officer, agent and representative of
the Union, Bullock had check signing authority and overall responsibility for
the conduct of WTU’s affairs.
12. During her tenure as President, Bullock made unauthorized personal
charges on WTU’s credit card accounts; issued or caused to be issued
unauthorized checks to herself and to others from WTU’s bank accounts;
knowingly received unauthorized funds and material goods paid for by WTU’s
bank accounts; knowingly received unauthorized funds and material goods paid
for by WTU funds; knowingly conducted financial transactions with money
received as the result of unlawful activity; and engaged in money laundering.
13. Together with Defendants Gwendolyn M. Hemphill ("Hemphill"),
James O. Baxter II ("Baxter"), Leroy Holmes ("Holmes"),
Errol Alderman ("Alderman"), Michael Martin, Cheryl Martin and
Gwendolyn B. Clark "(Clark"), Bullock orchestrated and participated
in an illegal scheme to convert Union funds to her personal use and to the use
of others.
14. Defendant Gwendolyn M. Hemphill is an individual who resides at 1919
Yorktown Road, N.W., Washington, DC 20012. Hemphill is a former WTU employee
who served as Special Assistant to the President and Legislative Representative
from 1996 through on or about September 2002.
15. In her position as an agent, employee and representative of the Union,
Hemphill had general responsibility for the financial affairs of the Union,
check writing responsibility and maintained possession and control of a
signature stamp bearing Bullock’s name.
16. During her tenure as Special Assistant to the President, Hemphill made
unauthorized personal charges on WTU’s credit card accounts; issued or caused
to be issued unauthorized checks to herself and to others from WTU’s bank
accounts; knowingly received unauthorized funds and material goods paid for by
WTU funds; knowingly conducted financial transactions with money received as
the result of unlawful activity; and engaged in money laundering.
17. Together with Defendants Bullock, Baxter, Holmes, Alderman, Michael
Martin, Cheryl Martin and Clark, Hemphill orchestrated and participated in an
illegal scheme to convert Union funds to her personal use and to the use of
others.
18. Defendant James O. Baxter, II is an individual who resides at 1307 Lark
Lane, Fort Washington, MD 20744. Baxter is the elected Treasurer of the
Washington Teachers’ Union.
19. Baxter served in the capacity as Treasurer from on or about July 1, 1994
through approximately September 2002, when he was asked to take a leave of
absence without pay from the Union.
20. In his position as an agent, employee and representative of the Union,
Baxter had check signing authority and financial responsibility for WTU’s
affairs.
21. During his tenure as Treasurer, Baxter made unauthorized personal
charges on WTU’s credit card accounts; issued or caused to be issued
unauthorized checks to himself and to others from WTU’s bank accounts;
knowingly received unauthorized funds and material goods paid for by WTU funds;
knowingly conducted financial transactions with money received as the result of
unlawful activity; and engaged in money laundering.
22. Together with Defendants Bullock, Hemphill, Holmes, Alderman, Michael
Martin, Cheryl Martin and Clark, Baxter orchestrated and participated in an
illegal scheme to convert Union funds to his personal use and to the use of
others.
23. Defendant Leroy Holmes is an individual who resides at 11101 Bennington
Drive, Upper Marlboro, MD 20774. Holmes served as Bullock’s personal driver
beginning around 1998 through approximately September 2002 and was paid for his
services by WTU.
24. Holmes knowingly received unauthorized funds from WTU; cashed checks for
large sums of money written on WTU’s accounts; knowingly conducted
unauthorized financial transactions with money received as the result of
unlawful activity; and engaged in money laundering.
25. Together with Defendants Bullock, Baxter, Hemphill, Alderman, Michael
Martin, Cheryl Martin and Clark, Holmes participated in an illegal scheme to
convert Union funds to his personal use and the personal use of others.
26. Errol Alderman is an individual who resides at 2300 Pattern Bond Drive,
Silver Spring, MD 20902.
27. Upon information and belief, Alderman was affiliated with a business
called Expressions Unlimited.
28. Alderman, individually and doing business as Expressions Unlimited;
knowingly received unauthorized funds from WTU, personally, individual and as
an agent of Expressions Unlimited, knowingly conducted financial transactions
with money received as the result of unlawful activity; and engaged in money
laundering.
29. Together with Defendants Bullock, Baxter, Hemphill, Holmes, Michael
Martin, Cheryl Martin and Clark, Alderman participated in an illegal scheme to
convert Union funds to his personal use and to the use of others.
30. Defendant Michael Martin is an individual who resides at 1200 Quartette
Lane, Bowie MD 20720.
31. Michael Martin is the son-in-law of Hemphill, the husband of Cheryl
Martin and upon information and belief, was affiliated with a business called
Expressions Unlimited.
32. Michael Martin, individually and doing business as Expressions Unlimited
knowingly received unauthorized funds and material goods paid for by WTU funds,
personally and individually, and as agent of Expressions Unlimited; knowingly
conducted financial transactions with money received as the result of unlawful
activity; and engaged in money laundering.
33. Together with Defendants Bullock, Baxter, Hemphill, Holmes, Alderman,
Cheryl Martin and Clark, Michael Martin participated in an illegal scheme to
convert Union funds to his personal use and to the use of others.
34. Defendant Cheryl Martin is an individual who resides at 1200 Quartette
Lane, Bowie, MD 20720. Cheryl Martin is the daughter of Hemphill and the wife
of Michael Martin.
35. Cheryl Martin knowingly received unauthorized funds and material goods
paid for by WTU funds; unknowingly conducted financial transactions with money
received as the result of unlawful activity; and engaged in money laundering.
36. Together with Defendants Bullock, Baxter, Hemphill, Holmes, Michael
martin, Alderman, and Clark, Cheryl Martin participated in an illegal scheme to
convert Union funds to her personal use and to the use of others.
37. Defendant Gwendolyn B. Clark is an individual who resides at 307 Yoakum
Parkway, #711, Alexandria, VA 22304. Clark is the sister of Bullock.
38. Clark knowingly received unauthorized funds and material goods paid for
by WTU funds; knowingly conducted financial transactions with money received as
the result of unlawful activity; and engaged in money laundering. Together with
Defendants Bullock, Baxter, Hemphill, Holmes, Michael Martin, Cheryl Martin and
Alderman, Clark participated in an illegal scheme to convert Union funds to her
personal use and to the use of others.
39. Independence Federal Savings Bank ("IFSB") is a federally
chartered stock saving bank located in Washington, D.C.
40. George Parker is a resident in the state of Maryland. Mr. Parker is a
teacher from the DC public school system and a member of the Washington
Teachers Union.
41. Gloria Guess is a resident in the state of Maryland. Ms. Guess is a
teacher for the DC public school system and a member of the Washington Teachers
Union.
42. Alfred Hubbard is a resident in the District of Columbia. Mr. Hubbard is
a teacher for the DC public school system and a member of the Washington
Teachers Union.
43. William Rope is a resident in the District of Columbia. Mr. Rope is a
teacher for the DC public school system and a member of the Washington Teachers
Union.
PLAINTIFFS AND ALL SIMILARLY SITUATED INDIVIDUALS’ RELATIONSIP
WITH THE DEFENDANTS
44. The named plaintiffs and all similarly situated individuals, of which
there are approximately 5,000 in total, are teachers in the District of
Columbia Public School System. Each plaintiff and those individuals similarly
situated are members of the labor union, WTU and its parent organization, the
AFT.
45. Each individual plaintiff and all similarly situated individuals
contracts with the union for the following services, benefits and/or
privileges:
(a) To bring the employees of the Board of Education and other employers
into relations of mutual assistance;
(b) To protect the legal rights of all members;
(c) To raise the standards of the teaching profession by insuring and
promoting conditions vital to effective services for all pupils;
(d) To define and strengthen services of the schools and to afford the
employees full opportunity to participate in the democratic decision-making
within schools for the common good;
(e) To provide and maintain, as sole and exclusive collective
representative for members of the bargaining units, the effective
implementation of the collective bargaining agreements between The Washington
Teachers’ Union and the Board of Education of the District of Columbia and
other employers;
(f) To make employees aware of their political and social rights and
responsibilities;
(g) To act as representative of the members in dealing with other agencies
involved with the Public Schools of the District of Columbia and other
employers of members in the Functional Chapters;
(h) To obtain exclusive bargaining rights, including the right to strike,
for teachers, paraprofessionals and school-related personnel, higher education
faculty and professionals, state and local public employees, health care
employees and other workers;
(i) To obtain for teachers and other workers all of the rights to which
they are entitled in a free society;
(j) To improve professional standards;
(k) To improve health standards;
(l) To improve public employee standards;
(m) To improve education;
(n) To promote the welfare of children;
(o) To promote the welfare of the health care consumer;
(p) To fight all forms of bias;
(q) To support and promote the ideals of democracy; and
(r) To encourage state federations and locals to organize retired members.
46. In consideration for the above services, benefits and/or privileges,
each of the individual plaintiffs and all similarly situated pay monthly dues
which when paid annually amounts to $3,000,000.
47. Those monthly dues form the basis for the operating expenses of the
union.
48. Elections are held wherein the union membership elects individuals to
oversee the day-to-day operations of the union and provide for the needs of the
union membership.
49. Certification of a class under the Federal Rules of Civil Procedure
23(b) (2) is appropriate, in that defendants have acted uniformly with respect
to the class, and appropriate relief includes a declaration that each class
member is entitled to recover all monies converted and misappropriated by
certain defendants.
50. Certification of a class under the Federal Rules of Civil Procedure is
also appropriate, in that:
(a). Common questions predominate over any individual questions.
(b). A class action is superior for the fair and efficient adjudication of
this controversy. The individual class members are likely to be unaware of
their rights and are not in a position to commence individual litigation
against the AFT and the individual defendants.
51. The class is so numerous that joinder of all members is impracticable.
There are 5,000 or more members of AFT and the WTU who have been wrongfully
deprived of monies rightfully belonging to them. The members of the class are
geographically dispersed throughout the District of Columbia. The exact number
of class members is unknown to the plaintiff at this time. However, the AFT and
the WTU have within their dues records the names and addresses of all the class
members.
52. Plaintiffs’ claims are typical of the claims of the other members of
the class, as plaintiff and all other members of the class were injured in
exactly the same way by the intentional unconscionable misappropriation and
theft of monies and properties rightfully belonging to these individual
plaintiffs and those similarly situated. AFT through WTU charged each class
member the same dues and the determination of whether those monies were
wrongfully converted and misappropriated is the same for each class member.
Plaintiff will fairly and adequately protect the interests of the members of
the class and has retained competent and experienced counsel who has retained
special outside counsel competent and experienced in class action litigation.
53. Plaintiff has no interests that are contrary to or in conflict with
those of the class.
54. A class action is superior to other available methods for the fair and
efficient adjudication of this controversy. Since the damages suffered by
individual class members may be relatively small, the expense and burden of
individual litigation make it virtually impossible for the class members
individually to seek redress for the wrongful conduct alleged.
55. Plaintiff knows of no difficulty that will be encountered in the
management of this litigation that would preclude its maintenance as a class
action.
56. Common questions of law and fact exist as to all members of the class
and predominate over any questions affecting solely individual members of the
class. Among the questions of law and fact common to the class are:
Whether AFT’s acts as alleged herein violated the fiduciary duty owed
plaintiffs by AFT;
Whether the individual defendants’ acts as alleged herein violated the
District of Columbia common law of conversion and misappropriation;
Whether the members of the class have sustained damages and, if so, the
proper measure of such damages; and
Whether the members of the class and future members are entitled to
equitable relief, and, if so, then what is the nature of that relief;
Whether the behavior of AFT, certain individual defendants acting in their
official capacity as union officials and Independence Federal Savings Bank was
so malicious and reckless as to warrant the award of punitive damages.
MEMORANDUM IN SUPPORT OF MOTION TO CERTIFY ACTION AS A CLASS ACTION
This case is ideally suited for class certification. Rule 23 of the Federal
Rules of Civil Procedure states in pertinent part:
(a) Prerequisites to a Class Action.
One or more members of a class may sue or be sued as representative parties
on behalf of all only if (1) the class is so numerous that joinder of all
members is impracticable, (2) there are questions of law or fact common to the
class, (3) the claims or defenses of the representative parties are typical of
the claims or defenses of the class, and (4) the representative parties will
fairly and adequately protect the interests of the class.
(b) Class Actions Maintainable.
An action may be maintained as a class action if the prerequisites of
subdivision (a) are satisfied, and in addition:
(1) the prosecution of separate actions by or against individual members
of the class would create a risk of
(A) inconsistent or varying adjudications with respect to individual
members of the class which would establish incompatible standards of
conduct for the party opposing the class, or
(B) adjudications with respect to individual members of the class which
would as a practical matter be dispositive of the interests of the other
members not parties to the adjudications or substantially impair or impede
their ability to protect their interests; or
(2) the party opposing the class has acted or refused to act on grounds
generally applicable to the class, thereby making appropriate final
injunctive relief or corresponding declaratory relief with respect to the
class as a whole; or
(3) the court finds that the questions of law or fact common to the
members of the class predominate over any questions affecting only
individual members, and that a class action is superior to other available
methods for the fair and efficient adjudication of the controversy. The
matters pertinent to the findings include: (A) the interest of members of
the class in individually controlling the prosecution or defense of separate
actions; (B) the extent and nature of any litigation concerning the
controversy already commenced by or against members of the class; (C) the
desirability or undesirability of concentrating the litigation of the claims
in the particular forum; (D) the difficulties likely to be encountered in
the management of a class action.
(c) Determination by Order Whether Class Action to be Maintained;
Notice; Judgment; Actions Conducted Partially as Class Actions.
(1) As soon as practicable after the commencement of an action brought as
a class action, the court shall determine by order whether it is to be so
maintained. An order under this subdivision may be conditional, and may be
altered or amended before the decision on the merits.
(2) In any class action maintained under subdivision (b)(3), the court
shall direct to the members of the class the best notice practicable under
the circumstances, including individual notice to all members who can be
identified through reasonable effort. The notice shall advise each member
that (A) the court will exclude the member from the class if the member so
requests by a specified date; (B) the judgment, whether favorable or not,
will include all members who do not request exclusion; and (C) any member
who does not request exclusion may, if the member desires, enter an
appearance through counsel.
Local Rule LCvR 23.1 (b) and LCvR 23.1 (c) of this Court’s rules states in
pertinent part:
(b) MOTION FOR CERTIFICATION
Within 90 days after the filing of a complaint in a case sought to be
maintained as a class action, unless the court in the exercise of its
discretion has extended this period, the plaintiff shall move for a
certification under Rule 23(c)(1), Federal Rules of civil Procedure, that the
case may be so maintained. In ruling upon the motion, the court may allow the
action to be so maintained, may deny the motion, or may order that a ruling be
postponed pending discovery or other appropriate preliminary proceedings. A
defendant may move at any time to strike the class action allegations or to
dismiss the complaint.
(c) PROVISIONS AS TO NOTICE
In an action maintained under rule 23(b)(3) of the Federal Rules of civil
Procedure, the plaintiff shall include in the motion for certification a
statement proposing (1) hoe, when, by whom, and to whom the notice required by
Rule 23(c)(2) shall be given, (2) how and by whom payment therefore is to be
made, and (3) by whom the response to the notice is to be received. In lieu of
such a statement the movant may state reasons why a determination of these
matters cannot then be made, and offer a proposal as to when the determination
should be made. In certifying a class action as maintainable under Rule
23(b)(3), the court may include in its order the provisions for notice pursuant
to Rule 23(c)(2) or may postpone a determination of the matter.
The proposed class is likely large (over 5,000) individuals and the actions
complained of by the four named plaintiffs applies to each and every class
member. Moreover, if class members were to bring their claims individually,
each would have to argue the same legal theories and establish essentially the
same facts, leading to gross inefficiencies.
General Legal Standards Governing Class Certification
Rule 23 and Rule 23-I provides for treatment of an action as a class action
when the plaintiff can show that all the prerequisites of Rule 23(a) are
satisfied, and that the class falls within one of the categories of Rule 23(b).
Youssef v. Cowan, 687 A.2d 594, 602 (D.C. 1996); 7A Wright, Miller &
Kane, Federal Practice and Procedure: Civil 2d § 1759, at 102 (1986).
Rule 23(a) provides:
One or more members of a class may sue or be sued as representative parties
on behalf of all only if (1) the class is so numerous that joinder of all
members is impracticable; (2) there are questions of law or fact common to the
class; (3) the claims or defenses of the representative parties are typical of
the claims or defenses of the class; and (4) the representative parties will
fairly and adequately protect the interests of the class.
See Wetzel v. Liberty Mut. Ins. Co., 508 F.2d 239, 246 (3d Cir.),
cert. denied, 421 U.S. 1011 (1975).
Plaintiff must also allege that the action qualifies for class treatment
under at least one of the subdivisions of Rule 23(b). Under Rule 23(b)(2), a
class action will be appropriate where "the party opposing the class has
acted or refused to act on grounds generally applicable to the class, thereby
making appropriate final injunctive relief or corresponding declaratory relief
with respect to the class as a whole." Under Rule 23(b)(3), a class action
will be appropriate where "the court finds that the questions of law or
fact common to the members of the class predominate over any questions
affecting only individual members, and that a class action is superior to other
available methods for the fair and efficient adjudication of the
controversy."
Class actions have two primary purposes: (1) to accomplish judicial economy
by avoiding multiple suits; and (2) to protect the rights of persons who might
not be able to present claims on an individual basis. See, e.g., Crown, Cork
& Seal Co. v. Parker, 462 U.S. 345 (1983).
The United States Supreme Court has endorsed the class action procedure as a
superior method of adjudicating cases like this where there are numerous claims
that are too small to litigate individually. Phillips Petroleum Co. v.
Shutts, 472 U.S. 797, 809 (1985).
Plaintiff bears the initial burden of advancing reasons a putative class
action meets the requirements of Rule 23. Goss v. Med. Serv. Of D.C., 462
A.2d 442 (D.C. 1983). However, Plaintiff’s burden is not a heavy one. See
Paxton v. Union Nat'l Bank, 688 F.2d 552, 562 (8th Cir. 1982). Once a
plaintiff has demonstrated a preliminary legal showing that the requirements of
Rule 23 have been met, the burden of proof is upon the defendant to demonstrate
otherwise. 2 H. Newberg, Newberg on Class Actions (3d Ed. 1992)
("Newberg") § 7.22 at 7-74 to 7-75. Provided that a plaintiff's
contentions regarding the class issues are based upon a reasonable foundation,
the court should not deny certification because of a defendant's challenge. The
rule's inherent flexibility, and the district court's ability to manage the
litigation as it develops, counsel against decertification. Pigford v.
Glickman, 182 F.R.D. 341, 346-347 (D.D.C.) (certifying subclasses under
Rule 23(a) and 23(b)(2))(Judge Friedman).
In this case, there is a clear and compelling need for class certification
of Plaintiffs’ claims. Thousands of individuals have paid union dues. This
money was subsequently misappropriated and illegally converted by certain
individual defendants. The amounts, in most of these cases, are too small to be
litigated individually.
Presumptions Applicable to Motion for Certification
In a class certification motion, Plaintiffs’ allegations in the complaint
are taken as true, and inquiry into the merits of the case is improper except
to determine whether there is a realistic claim. Eisen v. Carlisle &
Jacquelin, 417 U.S. 156, 177-78 (1974). Curtin v. United Airlines,
Inc., - U.S. App. D.C. -, 275 F.3d 88, 92 (D.C. Cir. 2001); Pigford, 182
F.R.D. at 350.
In a close case with respect to certification, a court should err on the
side of certifying the class, because a class can always be decertified. Rule
23(c)(1); In re School Asbestos Litig., 789 F.2d 996, 1011 (3rd Cir.
1986).
THIS CASE MEETS THE PREREQUISITES FOR A CLASS ACTION.
As demonstrated below, this case easily satisfies each of the requirements
of Rule 23 and Rule 23-I.
The Requirements of Rule 23(a) and Rule 23-I Are Satisfied.
The prerequisites of a class action as set forth in Rule 23(a) and Rule 23-I
are as follows:
(1) the class is so numerous that joinder of all members is impracticable;
(2) there are questions of law or fact common to the class;
(3) the claims or defenses of the representative parties are typical of the
claims or defenses of the class;
(4) the representative parties fairly and adequately protect the interests
of the class.
Plaintiff has met these prerequisites in this case.
Rule 23(a)(1) Is Satisfied because Joinder is Impracticable.
Rule 23(a)(1) provides for class certification where the class is so
numerous that joinder of all member is impracticable. "The federal courts
have repeatedly stated that there is no 'magic number' of class members
required before certification is granted." Although there is no set number
which equates with impracticability in all cases, a presumption of numerosity
has developed at the 40-member level:
. . . In light of prevailing precedent, the difficulty inherent in joining
as few as 40 class members should raise a presumption that joinder is
impracticable, and the plaintiff whose class is that large or larger should
meet the test of Rule 23(a)(1) on that fact alone.
1 H. Newberg & A. Conte, Newberg on Class Actions, § 3.05 at 3-25 (3rd
ed. 1992) (hereinafter "Newberg").
Plaintiff has alleged that, "there are at least five thousand members
of the teachers union who have been injured as a result of a breach or breaches
of a duty or duties owed by the defendants. It is not necessary that the
precise number of class members be known.
Rule 23(a)(2) Is Satisfied because there are Numerous Questions of Law and
Fact Common to the Class.
"[T]he commonality test is met where there is at least one issue,
the resolution of which will affect all or a significant number of the
putative class members.’" Kifafi v. Hilton Hotels Retirement Plan,
189 F.R.D. 174, 176-177 (D.D.C. 1999)(emphasis added); Reed v Phillip Morris,
Inc., 125 WLR 2197, 2200 (Super. Ct. 1997). This case presents many questions
of fact and law common to the proposed class.
Common questions of law and fact exist as to all members of the class and
predominate over any questions affecting solely individual members of the
class. Among the questions of law and fact common to the class are:
whether the defendants acts as alleged herein breached a fiduciary duty
owed the plaintiffs;
whether the defendants converted and/or misappropriated monies and
properties belonging to or held in trust for not only the named plaintiffs,
but all other individuals similarly situated;
whether the members of the class have sustained damages and, if so, the
proper measure of such damages; and
whether the members of the class and future members are entitled to
equitable relief, and, if so, what is the nature of that relief.
Certainly where, as here, "plaintiff and the class allege the same
causes of action, brought under the same statutes, and seek the same
relief," commonality is satisfied, because of the unitary nature of the
defendant's conduct. Pigford, 182 F.R.D. at 350. Thus, common questions exist
and the commonality requirement of Rule 23(a)(2) is satisfied.
Rule 23(a)(3) Is Satisfied Because Plaintiff’s Claims are Typical.
Rule 23(a)(3) requires that the claims of the representative parties be
typical of the claims of the class. This requirement is met if the
representative plaintiff’s claim arises from the same event or practice or
course of conduct that gives rise to a claim or another class member’s where
his or her claims are based on the same legal theory. Pigford, 182 F.R.D. at
350.
When it is alleged that the same unlawful conduct was directed at or
affected both the named plaintiff and the class sought to be represented, the
typicality requirement is usually met irrespective of varying fact patterns
which underlie individual claims.
Newberg ¶ 3.13 at 3-77.
In practice,
the requirements of commonality, typicality, and adequacy tend to merge so
that they are often analyzed together to determine 'whether under the
particular circumstances maintenance of a class action is economical and
whether the named plaintiff's claim and the class claims are so interrelated
that the interests of the class members will be fairly and adequately
protected in their absence.
General Tel. Co. of Southwest v. Falcon, 457 U.S. 147, 158 n.13, 72 L.
Ed. 2d 740, 102 S. Ct. 2364 (1982).
Plaintiff's claims are typical of the claims of the other members of the
class, as plaintiff and all other members of the class were injured in exactly
the same way by the intentional pattern of conversion and misappropriation of
monies in violation of federal and District of Columbia law. The proposed
representative’s claims are not only typical but virtually identical to the
claims of the class. The identification of the class members, and the
computation of the relief to be afforded each class member, can be accomplished
by a ministerial examination of the defendant's files.
Rule 23(a)(4) is Satisfied Because Plaintiff and Her Counsel are Adequate
Representatives of the Class.
Rule 23(a)(4) requires that the representative party will fairly and
adequately protect the interests of the class. Levant v. Whitely, 755
A.2d 1036, 1049 (D.C. 2000); Pigford, 182 F.R.D. at 350. This
requirement is met when there is no conflict of interest between the legal
interests of the named plaintiffs and those of the proposed class, and
plaintiff's counsel is qualified, experienced, and generally able to conduct
the proposed litigation.
In this case, no conflicts of interest exist between the representative
plaintiff and the proposed class. Just the opposite, the issues presented by
the named plaintiff’s mirror those faced by the putative class, which stands
only to gain by this action. Plaintiff is committed to the action, and her
interests are the same as the interests of the other members of the proposed
class. Compl. ¶22.
Plaintiff’s counsel, Janai C. Reed and Harold Brazil are competent to
represent the members of the class. As described below, Plaintiffs’ counsel
are experienced attorneys with sufficient staff resources to provide the
primary source of legal representation in this case. Plaintiffs’ counsels,
who are currently solo practitioners, have practiced for more than fourteen
years, and have handled complex cases and over 100 trials at the local level.
Also, counsel has associated (for this matter) with more experienced counsel
for consultation in this case.
The Conditions of Rule 23(b) Have Been Met
In addition to meeting the prerequisites of Rule 23(a), an action must
satisfy at least one of the conditions of subdivision (b) of Rule 23. Plaintiff
proceeds here under Rule 23(b)(2) and (3) which provide in pertinent part:
An action may be maintained as a class action if the prerequisites of
subdivision (a) are satisfied, and in addition
[(b)(1) omitted]; or
(2) the party opposing the class has acted or refused to act on grounds
generally applicable to the class, thereby making appropriate final
injunctive relief or corresponding declaratory relief with respect to the
class as a whole; or
(3) the court finds that the questions of law or fact common to the
members of the class predominate over any questions affecting only
individual members . . .
Rule 23(b)(1), (2), (3).
This action qualifies as a class action under Rule 23(b)(2) because the
defendants’ unitary course of conduct affecting class members represents
conduct of general applicability to all members of the proposed class.
This case also qualifies for certification under Rule 23(b)(3).1 As discussed
above, there are numerous questions of law and fact common to the proposed
class. Once common questions of liability are resolved, all that remains is the
mechanical act of computing the amount of damages suffered by each class
member.
Plaintiff has alleged uniform behavior conducted by defendants against
Plaintiffs and the class members. Accordingly, the issues of law and fact which
flow from Defendant’s uniform activity predominate over any individual issue.
Common issues predominate over individual issues where plaintiffs have alleged
a common course of conduct on the part of a defendant. Prudential Insurance
Sales Company America Sales Practice Litigation Agent Actions, 148 F.3d
283, 314-315 (D.C. Cir 1998).
In addition to finding the predominance of common questions, Rule 23(b)(3)
also requires that the Court determine that "a class action is superior to
other available methods for the fair and efficient adjudication of the
controversy." It has been widely recognized that a class action is
superior to other available methods -- particularly, individual lawsuits -- for
the fair and efficient adjudication of a suit that affects a large number of
persons injured by violations of consumer protection laws or common law. Prudential,
148 F.3d at 316.
The cost of pursuing individual litigation to seek recovery against a
well-financed adversary is not feasible. Thus, the alternatives to a class
action are either no recourse for thousands of injured union members, or even
in the unlikely event that they all become aware of their rights and could
locate counsel, a multiplicity of suits. Accordingly, a class action is
superior to other available methods for the fair and efficient adjudication of
this matter.
There is no question but that this class action would be easily manageable.
This case presents no manageability difficulties that would preclude class
certification. The amount of each class member’s damages are the same, a
refund of the union dues and assets.
The alternative to a class action is no recourse for thousands of District
of Columbia requestors to whom the courthouse would be prohibitively expensive
if they were forced to maintain individual actions.
For the reasons stated herein, plaintiffs respectfully request that the
Court grant their motion for class certification.
1. Courts have often certified classes for the purposes of both equitable
relief and damages. Pigford, 182 F.R.D. at 350. |